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Opinion
Nisha Gopalan

Facing Recession, Hong Kong’s Small Businesses Need a Boost

Easier capital rules for banks aren’t likely to release sufficient credit to hard-pressed enterprises.

Tourism and retail spending from mainland China have plummeted in Hong Kong.

Tourism and retail spending from mainland China have plummeted in Hong Kong.

Photographer: Billy H.C. Kwok/Bloomberg

Hong Kong’s small businesses need some help as the city faces its first recession since the global financial crisis. But the latest relief extended by the de facto central bank will barely move the needle.

The Hong Kong Monetary Authority is reducing the amount of capital that lenders have to maintain, a move its chief executive said is aimed at easing lending to small- and medium-size enterprises struggling with the economic fallout of protests that have struck the city since June.

The so-called counter-cyclical capital buffer was lowered to 2% from 2.5% and thus will allow banks to release an additional HK$200 billion to HK$300 billion ($25 billion to $38 billion) of credit, the authority said. Though welcome, the move will offer less help to small businesses than, say, a rate cut would have. With a currency pegged to the U.S. dollar, that’s something Hong Kong can’t do without the Fed trimming rates first.