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Hong Kong's economy: Hong Kong's protests start to hurt business



Paul Chan, the chief financial officer of Asia's premier economic hub, said Sunday that the city's mass demonstrations have harmed local merchants and "worried all those in Hong Kong."
These "events have … damaged Hong Kong's international image and business environment," Chan wrote in a blog post. "For foreign companies and tourists, Hong Kong appears to have become turbulent and uncertain, affecting their desire to travel, do business and invest in Hong Kong."

Many retailers and catering operators have said " the recent business volume has dropped significantly, "he added.

Chan's remarks during the eighth consecutive weekend of demonstrations in the city, which is technically part of China, but operates with its own police force and justice system. Thousands of protesters defied police orders Sunday to march through the city center. They spread in different directions and blocked main roads, led Hong Kong's central district to silence and caused malls and shops to close early.

The protests were triggered by opposition to a controversial and now cumbersome bill that would have allowed extradition from Hong Kong to China. But they have since evolved to include calls for greater democracy, an independent investigation into alleged police brutality and the resignation of the city's leader, Carrie Lam.

The events of the weekend affected the local stock market on Monday. Hong Kong's Hang Seng index fell as much as 1
.6%, although it reduced losses to 1% at the close of trading.

Like other Asian markets, the index was dragged down by trade uncertainty and other economic political news this week. But fears about how the protests could affect the economy also weighed in for real estate developers, mall owners and retailers.

After the last demonstration round, the US Chamber of Commerce in Hong Kong on Monday asked for "firm" government leadership to restore weak business confidence. It also encouraged protesters to refrain from violence.

"AmCham urges the government to stop further damage and show clear leadership in meeting the expectations of the Hong Kong people and in restoring the city's international reputation for effective governance under the & # 39; one country, two systems & # 39 ;," AmCham President Tara Joseph said in a statement. She referred to the fact that the city has its own police force and justice system which is separate from China.

Joseph added that a "clear majority" of AmCham's membership states that the government must address the "underlying causes of the protests, and not just document the cracks of social instability with a short-term law-and-order solution." 19659014] Hong Kong protests: Rebellion police fire tear gas on protesters for second day in a row ” data-src-mini=”//cdn.cnn.com/cnnnext/dam/assets/190728074027-05-hong-kong-protests-0728-small-169.jpg” data-src-xsmall=”//cdn.cnn.com/cnnnext/dam/assets/190728074027-05-hong-kong-protests-0728-medium-plus-169.jpg” data-src-small=”http://cdn.cnn.com/cnnnext/dam/assets/190728074027-05-hong-kong-protests-0728-large-169.jpg” data-src-medium=”//cdn.cnn.com/cnnnext/dam/assets/190728074027-05-hong-kong-protests-0728-exlarge-169.jpg” data-src-large=”//cdn.cnn.com/cnnnext/dam/assets/190728074027-05-hong-kong-protests-0728-super-169.jpg” data-src-full16x9=”//cdn.cnn.com/cnnnext/dam/assets/190728074027-05-hong-kong-protests-0728-full-169.jpg” data-src-mini1x1=”//cdn.cnn.com/cnnnext/dam/assets/190728074027-05-hong-kong-protests-0728-small-11.jpg” data-demand-load=”not-loaded” data-eq-pts=”mini: 0, xsmall: 221, small: 308, medium: 461, large: 781″ src=”data:image/gif;base64,R0lGODlhEAAJAJEAAAAAAP///////wAAACH5BAEAAAIALAAAAAAQAAkAAAIKlI+py+0Po5yUFQA7″/>

[19659004] Hundreds of thousands of people have taken to the streets since protests began for two months ago and plunged the city into the most serious political turmoil since returning to China in 1997.

AmCham members – representing financial services, technology and other sectors – suggested that Lam's government formally and completely withdrawn the bill, to remove any room for public doubt. The business group also suggested that a summons to an independent investigation into all aspects of recent turmoil over the bill could restore confidence in Hong Kong.

The city will report quarterly economic growth data on Wednesday. Hong Kong's economy is growing at its slowest pace since the global financial crisis of 2009, hurt by reducing retail sales, slow factory orders and ongoing US-China trade tensions.

Economists say that the protests can exacerbate these challenges.

The city "has been hit hard by protests against the government … which could damage growth further below the 0.6% rate" from the first quarter of the year, ING economist Prakash Sakpal wrote in a research note last week.

Others were less convinced of a link with the protests. Hannah Anderson, global market strategist at JP Morgan Asset Management, said the weeks of massive protests are unlikely to affect the city's economic trajectory.

"Although all stores close early, or close all day, is there changing consumption, or change when people shop?" Anderson said, adding that people haven't stopped buying groceries or other items – they buy them right now on different days.

The city itself has also tried to reassure investors and tourists. Prior to this weekend's protests, the Secretary for Trade and Economic Development wrote to consulates and international chambers of commerce to tout Hong Kong as "a welcoming city for investors and visitors, and a safe city for travelers."

Laura He contributed to this report.


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