Today the Podcast Podcast Economy
In Hong Kong, how finance is resisting the recession
In Hong Kong, tension is still high around the Polytechnic University, where hundreds of student protesters have been cut off for three days. In the absence of a political response to their movement, they called on their supporters to " strangle the economy ".
Five months of continuous protests plunged Hong Kong into recession, the island sought by billionaires. It's official since Friday: growth is now negative, at -2.9% year-on-year. Since the handover to China, the former British colony undoubtedly lives its worst economic malaise . It has already experienced the recession in 2003, because of bird flu, then in 2008, following the US financial meltdown. This time, the causes are internal: the political turmoil tightens its embrace on the economy. Nobody sees a quick solution to this recession as long as a dialogue is not initiated between the young protesters and the authorities.
Which sectors of the economy are most affected ?
These are tourism and commerce. Retail sales have plummeted since this summer. Ditto for air traffic: -13% for the month of October alone. And unemployment, almost nonexistent until then in this city of immigration, is dying. Restaurants and businesses start by lowering wages and eventually dismissing because of the frequent closures caused by the riots. Finance, the other pillar of the archipelago, has so far been relatively spared. The stock market has certainly lost 12% since June, but it remains at a level higher than that of January 2019. The clashes of last week in the historic business district located on the island of Hong Kong was the only moment of real confrontation between the protesters and the market magnates. Aside from the impact on privacy, such as longer travel times, business continues, says one of the executives of this thriving industry.
How to explain the resilience of finance ?
Honk Kong is the third largest financial center in the world, behind New York and London. And this place of choice, linked to his status, is probably his best life insurance. Mainland China, which has taken over this confetti of empire, still needs the financial hub it represents, a point of passage still unavoidable between the West and China. It is still the gateway for foreign investors that China wants to welcome, because they know that their assets are safe here. And for Chinese companies, it's the airlock to globalized markets. They flock to Hong Kong to be listed. In recent years, their presence makes the fortune of the local Stock Exchange. As evidenced by the listing of Alibaba scheduled next Tuesday. The Chinese online trading giant is looking to raise $ 13 billion, while the street is ablaze.
Will Alibaba's listing really take place ?
Alibaba began the process in June and has been steadily delaying it due to political unrest. We can therefore wonder about the choice of the date. Some see it as a political gesture from Beijing, a way of telling the rest of the world that the city continues to deliver what is expected of it: first rate financial services. Our interlocutor Hong Kong does not see what could question it, except, concedes he, a Chinese military intervention. Precisely what is feared today.
►In brief
In France the National Assembly votes today the 2020 budget
A budget focused on purchasing power with a decrease in income tax of 5 billion euros for the 17 million households less taxed. This measured recovery comes in a tense social climate, with "yellow vests" and the day of December 5 strike against the pension reform, feared by the government.