Top firms feel the heat of Occupy Central

July 10, 2014 14:59
Pro-democracy protesters occupy a street in Hong Kong's Central district at dawn on July 2 after an overnight vigil. Business and financial bodies have mixed views on the movement. Photo: Reuters

Leading financial institutions, business chambers and companies are feeling the heat of the Occupy Central protests in Hong Kong as full-scale blockade actions look increasingly imminent following the night-time action at Chater Road at the end of the July 1 march.

Some are already embroiled in the bitter row between Hong Kong's pan-democrats that spearheaded the Occupy Central actions and the Chinese and Hong Kong governments over universal suffrage for the chief executive election in 2017.

This week saw HSBC, the city's biggest bank, revising a research report published on Monday on why it downgraded the stock market prospects after its original views became the subject of sharp criticism on Twitter and Weibo.

The bank's equity investment strategy report originally highlighted the financial risks caused by Occupy Central. Hours later, an updated version of the report suggested the residential market was the main reason.

Meanwhile, a joint statement issued at the end of last month by the Big Four accounting firms -- Ernst & Young, KPMG, Deloitte, and PricewaterhouseCoopers -- condemning Occupy Central has caused embarrassment, if not disgrace, to the leading firms.

First came a statement issued by a group of employees, saying "boss, your statement does not represent our views". On Wednesday, a commentary carried in the Financial Times noted that the "Hong Kong arms of the Big Four have got the rule of law wrong". Referring to their criticism of the civil disobedience protests, the article said the firms failed to differentiate between rule of law under the common law system and rule by law as adopted in the communist-ruled mainland.

In an interview with the British newspaper earlier, former colonial governor Chris Patten also took issue with the Big Four's statement. He claimed the Hong Kong arms have not consulted their headquarters in London before issuing the statement.

The bad publicity for the prominent financial firms sheds some light on the dilemma they face when deciding whether they should take a stance publicly and, if so, what, on the hyper-sensitive Occupy Central.

In view of Beijing's staunch opposition to Occupy Central protests, companies that take a similar stance will inevitably be viewed from the prism of cynicism. Regardless of the strength of the arguments they have, their opposition will be construed as a move aimed, wholly or partly, to please the Chinese authorities.

It has therefore come as little surprise that an attempt to solicit the participation of all major foreign business chambers in Hong Kong for a joint statement in opposition to Occupy Central last month has drawn mixed results.

Leading chambers representing American and British firms, for instance, have not joined the move.

While reflecting the complicated international politics, the mixed views among and within business and financial bodies are also indicative of the difficulties that analysts and business leaders face in gazing through the crystal ball to get a sense of what Occupy Central may bring.

A snapshot of some research reports released this week gave a diverse picture of the possible impact of the civil disobedience action.

Leading international bank Barclays cited Occupy Central as one of the "unexpected shocks" that could trigger a property market slump. That would take Hong Kong longer to recover than after the crashes of 2003 and 2008, it said.

Earlier this week, Fan Cheuk-wan, Asia Pacific managing director for Credit Suisse Private Banking and Wealth Management, said she believes that Occupy Central will not have a huge impact on the financial system as the industry has taken precautions.

"Foreign investors are more concerned whether the central government is adjusting the policy of 'one country, two systems' towards Hong Kong," she said. Investors, she added, also saw judicial independence as essential, referring to fears about independent judiciary after Beijing published a white paper on Hong Kong's "one country, two systems".

Political sensitivity, if any, aside, financial and political analysts can be pardoned for their failure to see eye to eye or to give a definite assessment on the city's scene if the mass blockade goes ahead.

One major reason is that the civil disobedience movement looks likely to become a long-running stand-off, not a single blockade action as originally planned by the Occupy Central founding trio led by Benny Tai, in light of the developments since July 1.

Some pan-democrats said they might hold small-scale Occupy Central protests as early as this month or next month. How the police handle the protests and their aftermath is difficult to tell at this stage.

The duration of the protests and their aftermath may remain short. Their impact will therefore be limited.

The implications of Occupy Central from a longer perspective, however, are about whether Beijing will change its basic policies towards Hong Kong under the grand plan of "one country, two systems". That will have profound implications on questions like the economic and financial role of Hong Kong set against the development of cities including Shanghai and Shenzhen.

That will be an equally difficult question for top business and finance executives and analysts to answer, on top of the question of whether or not to comment on Occupy Central.

-- Contact the writer at [email protected]


He was editor-at-large at the South China Morning Post and, more recently, deputy chief editor of the Hong Kong Economic Journal.