Hong Kong protests: economy lost an estimated HK$2.8 billion over ‘golden week’, experts say

Cannix Yau

Hong Kong’s economy lost at least HK$2.8 billion (US$356 million) over the past six days, according to local analysts and business leaders, with visitor numbers in free-fall and the city’s rail network crippled by rampaging anti-government protesters.

Experts who spoke to the Post on Monday said the damage to certain business sectors – such as retail, dining, transport and hotels – could exceed HK$1.9 billion over the three-day holiday weekend.

Each source also predicted that Hong Kong’s economy would only get worse as the protest crisis grinds on.

The head of a local brokerage firm estimated that the MTR Corporation lost around HK$500 million over the weekend, citing the damage caused by protesters and the loss of ticket revenue.

Protesters vandalised and destroyed an entrance to the Mong Kok MTR station during a rally in defiance of the anti-mask law on Sunday. Photo: K.Y. Cheng
Protesters vandalised and destroyed an entrance to the Mong Kok MTR station during a rally in defiance of the anti-mask law on Sunday. Photo: K.Y. Cheng

Chief Executive Carrie Lam Cheng Yuet-ngor on Friday issued a ban on masks at public assemblies by invoking a colonial-era emergency law not used in more than half a century.

Protesters reacted with violence, strongly denouncing and defying the mask ban as they unleashed destruction and chaos across Hong Kong on Saturday and Sunday. Amid the mayhem, rumours appeared online that the new level of destruction could result in restrictions on the city’s financial system that would target protesters.

Financial Secretary Paul Chan Mo-po on Sunday swiftly quashed the rumours, saying the government had no plan to impose foreign exchange controls and was committed to keeping a free flow of capital in the city.

Shops at the Time Square shopping mall closed. Photo: Martin Chan
Shops at the Time Square shopping mall closed. Photo: Martin Chan

In August, Chan unveiled a basket of economic measures worth more than HK$19 billion for small and medium enterprises to mitigate the effects of the economic headwinds.

Extensive vandalism at MTR stations on Saturday caused the city’s rail system to completely shut down for the first time in its 40-year history. Most malls, supermarkets and even convenience stores were also closed for the day.

By Sunday morning, half of the city’s MTR stations were closed and all lines were closed – except the Airport Express – around 7.30pm. A number of shopping centres, including Festival Walk, the IFC Mall and Sogo, were shut in fear of more protest violence.

On Monday, the rail giant shut down 54 of its 94 stations and closed all services at 6pm – except the Airport Express. Many shops and malls, including MegaBox in Kowloon Bay, closed early on Monday despite it being the annual Chung Yeung Festival.

A masked anti-government protester on Sunday leaves after helping to set a fire at the entrance of an MTR station. Photo: Reuters
A masked anti-government protester on Sunday leaves after helping to set a fire at the entrance of an MTR station. Photo: Reuters

Tourism’s lawmaker Yiu Si-wing said immigration figures from October 1 to October 6 – the Chinese ‘golden week’ – dropped by 53.6 per cent from last year to 730,000 visitors.

The number of visitor arrivals on Sunday, which reached about 83,000, fell by 62 per cent compared to the same day last year.

Yiu said visitors to Hong Kong spend an average of HK$4,000 during their time in the city. Based on that average, he calculated that the declining visitor numbers meant a loss of at least HK$2.8 billion since October 1.

The decline in visitor numbers is more than our original forecast of about 40 per cent. We did not expect the situation to be so bad.

Tourism’s lawmaker Yiu Si-wing

Yiu said Hong Kong’s hotel occupancy rate had fallen to about 50 per cent from over 95 per cent during the same period last year.

“The decline in visitor numbers is more than our original forecast of about 40 per cent. We did not expect the situation to be so bad, and many hotels have already cut prices to attract visitors,” he said.

“The market outlook is dim because there’s still no sign of the protests easing. So far, nobody can tell us when this social unrest will die down, not even the government.”

Economist Andy Kwan Cheuk-chiu, director of ACE Centre for Business and Economic Research, estimated that the retail sector suffered a loss in sales of about HK$1 billion – or about 25 per cent – over the past three days. He said his estimate was based on the HK$40 billion in retail sales that was recorded last October.

Professor Andy Kwan said the government’s use of the emergency law to enforce the mask law would cause long-term economic damage. Photo: Xiaomei Chen
Professor Andy Kwan said the government’s use of the emergency law to enforce the mask law would cause long-term economic damage. Photo: Xiaomei Chen

Kwan said it was the government’s use of the emergency law, not the destructive protests, that would eventually inflict more damage on Hong Kong’s economy.

“The impact of the protests on the economy is only short-term,” he said. “After all, I think not all the troublemakers are real protesters. Some are disguised as protesters.”

He continued: “But invoking the emergency law will have a long-term damaging impact on Hong Kong’s economy. It will cause a crisis of confidence among people, including investors, as many doubt its lawfulness and justification.”

The confidence crisis would lead to an exodus of capital, which would lead to a currency crisis in Hong Kong and seriously cripple China’s economy.

Economist Andy Kwan Cheuk-chiu

Kwan said the enforcement of the emergency law would fuel speculation that it would be extended to other aspects of daily life, such as potentially freezing protesters’ assets and bank accounts.

“People may think there will be more occasions of applying this law,” he said. “It gives the impression that the excellence of Hong Kong’s system has been eroded by bad governance.”

Kwan said the worst scenario could be a collapse of the city’s economy.

“The confidence crisis would lead to an exodus of capital, which would lead to a currency crisis in Hong Kong and seriously cripple China’s economy,” he said.

Anti-government protesters destroy Mong Kok MTR Station causing a flood following a rally in defiance of the anti-mask law issued by the government on October 5, 2019. Photo: Sam Tsang
Anti-government protesters destroy Mong Kok MTR Station causing a flood following a rally in defiance of the anti-mask law issued by the government on October 5, 2019. Photo: Sam Tsang

Francis Lun Sheung-nim, chief executive of the brokerage Geo Securities, estimated the MTR Corp suffered a loss of HK$500 million over the weekend, factoring in HK$300 million from the damaged facilities and HK$200 million from loss of revenue.

Lun said the government-owned rail giant would face more problems from protesters because many have accused it of siding with the police.

“The MTR station facilities have been repeatedly damaged and the repairs cannot keep pace with the destruction,” he said.

“I think, in the end, the MTR may suffer a deficit this year.”

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