Investors have been impacted by the protests currently taking place in Hong Kong. The protests have left their mark on those whose investment portfolios include exposure to Hong Kong in a range of ways.
Pro-democracy protestors have been occupying spaces outside government buildings in reaction to recent government decisions. The protestors are unhappy about reforms which allow future leaders to be democratically elected, but only by a comparatively small group of people who have been approved to vote by Beijing. Early on Monday morning, riot police fired tear gas at thousands of protestors, and there are concerns that the situation could further intensify before things come to an end. These protests are being called the most severe political unrest that Hong Kong has seen in the seventeen years since the former British territory was handed back to China in 1997.
The protests are having a significant economic impact, which is in turn having an effect on investors’ portfolios. A number of large banks have announced that their operations in Hong Kong are to be suspended. Many branches, cash withdrawal machines, and cash deposit machines are being closed amidst the unrest, and many staff are being instructed to go to secondary sites or to simply stay at home.
A number of businesses are also being affected by the unrest. It is believed that the most vulnerable business types will include retailers and those whose activities relate to tourism or benefit from tourist trade. This is particularly true with the approach of China’s National Day Holidays this week, usually a peak tourist season.
These economic factors are naturally impacting upon investments in the region. Those who hold investments in Hong Kong’s stock market, for example, have seen their portfolios affected by the unrest as the market suffers. By the end of Monday’s session, the Hang Seng index found itself 449 points lighter than it had been when it began. This represents a rapid 1.9% drop, with the market eventually closing at 23,229.21.
Forex traders with investments in Hong Kong have also been affected by the protests. In light of unrest, the value of the Hong Kong dollar against the US dollar plummeted. It ended up at a six month low of just 0.13 US dollars (GB£0.079).
According to IG Markets’ Ryan Huang: “The recent stream of China macro data has not been particularly strong to bolster investor confidence, and worsening sentiment will not do the markets any favours.”