Hong Kong Protesters Delay Referendum Amid Differences

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Hong Kong pro-democracy leaders shelved a vote on the movement’s direction as confusion grew within its ranks and signs mount that five weeks of protests are damaging the financial center’s prospects.

Protesters abruptly canceled a referendum scheduled for last night after the leaders couldn’t agree on the issues to be voted upon. Separately, the city’s stock exchange late yesterday said it didn’t know when a trading link with Shanghai, expected to start this month, will receive regulatory approval.

China is showing no signs of budging in the face of the protests, which were sparked by its decision to exercise control over the nomination of candidates for Hong Kong’s first-ever leadership election in 2017. Shares of Hong Kong Exchanges and Clearing Ltd. fell today, with its chief executive saying he wouldn’t be surprised if the protests were among factors behind the wait for the regulatory approval.

“This is a way for China to put additional pressure on the Hong Kong government to speed up the return to normalcy,” Jean-Pierre Cabestan, a political science professor from Hong Kong Baptist University, said by phone.

Tung Chee-hwa, Hong Kong’s former leader, said Oct. 24 that the demonstrations are tearing the city apart and risk hurting its economy. While a survey indicated public support for the movement has grown, the city’s court is hearing suits filed against the road blockades that have snarled traffic and hurt the takings of taxi and bus drivers.

Social Tension

Hong Kong Exchanges and Clearing Ltd. fell 4 percent to HK$167.40 at 1:42 p.m. local time today.

All technical preparations are complete amid “market expectations” that the program will start this month, the bourse operator said in a statement. The link would give foreigners unprecedented access to China’s $4 trillion stock market.

Asked about the impact of the protests, Chief Executive Officer Charles Li said “it wouldn’t really surprise me if an important development like that in Hong Kong is a factor, but I do not know as a matter of fact that it is a factor.”

“Obviously Occupy Central has a significant impact on some part of Hong Kong’s business activities,” he said.

The key question over the protests is whether the social and political tensions could be managed or would worsen over time, Fitch Ratings said today in a statement.

Investor Confidence

“A deepening of social divisions that lead to a recurrence of large-scale demonstrations could eventually have a negative effect on foreign and domestic business and investor confidence in Hong Kong as a place to do business,” Fitch said.

While the city’s leadership worried over the possible costs of extended demonstrations, the protest leaders are left pondering their next move after a first round of talks with the government failed to yield a solution.

Alex Chow, the secretary general of the Hong Kong Federation of Students, yesterday apologized for the cancellation of the referendum, saying the leaders failed to recognize differences in opinion. The group, which is one of the leading groups for the protests, said it needed to do more work before holding a vote.

“We decided to suspend the voting, what will be the next step?” Benny Tai, co-founder of Occupy Central with Love and Peace, one of the movement’s groups, said yesterday. “It may or may not be another round of voting, or it may be a territory-wide referendum, so we will all have to wait and see what will be the views of our supporters.”

Public Nomination

Protest leaders wants China to allow public nomination of candidates for the chief executive election. The Hong Kong government has said that’s against the city’s Basic Law, its de facto constitution, which allows for China to put in place a nominating committee to screen candidates.

Demonstrations broke out across the city last month, with protesters seizing roads and erecting barriers at three areas to demand China reverse its decision.

Hearings that began last week to appeal interim injunctions banning pro-democracy protesters from defending their barricades, continued today.

The injunctions were filed on behalf of an association of taxi drivers and a minibus company at a protest site in Mong Kok, and a property company controlled by Chinese state-backed Citic Ltd. at the main site in Admiralty.