Hong Kong's biggest bank altered a report on why it downgraded the city's stock market prospects, after originally highlighting the risks posed to the city by Occupy Central.
The original version of the bank's flagship equity investment strategy report, penned by analysts and released yesterday, stated: "We reduce Hong Kong to 'underweight' on concerns about negative news flow. Occupy Central... could sour relations with China and may hurt the economy.
However, just hours later, and following criticism on Twitter and Weibo for bringing up the Occupy protests, the report was updated to suggest the residential market was the main reason for concern.
The amended version read: "We reduce Hong Kong to 'underweight' on the risk of weak residential real estate prices, the slowdown in mainland tourist arrivals, the market's link to US interest rates (the Federal Reserve could raise rates next year) and weak earnings momentum.
"We also note recent concerns about negative news flow regarding the Occupy Central campaign."
A bank spokesman refused to comment on why the report was updated. It was understood that only the banks; clients have access to the document posted on the internet, while journalists were able to obtain it through the bank's media relations team.
The original bleak assessment of the bank's fortunes came as leaders of the civil disobedience movement considered bringing forward to next month their plan to block streets in Central, with support from student groups who staged a rehearsal on Chater Road after the annual July 1 march.
But Occupy co-organiser Dr Chan Kin-man said he believed the sit-in would create only a temporary disturbance.
"What we are pursuing is the long-term transparency and accountability in the government, which is good for the economy," Chan said. "Investors should not worry as this will be a very peaceful protest."
The Occupy movement wants genuine universal suffrage for the 2017 chief executive election, with the public having the right to nominate candidates, a proposal Beijing rejects.
Dr Billy Mak Sui-choi, Associate Professor of the Baptist University’s Department of Finance & Decision Sciences, said while it is not unusual for analysts to update their reports, HSBC’s quick amendment “seemed a little bit odd and that a lack of co-ordination was involved.”
“There could be three main reasons: First of all, may be there are some big mistakes that need to be clarified; or maybe some new information has emerged, making a prompt update necessary," Mak said.
"Or maybe the quality control was not well done – because if a report was released in the name of the bank it represents the view of the company, but if there’s distance between [the company and the analysts’ views], it is obviously a managerial problem,” Mak said.
The HSBC report came 10 days after ratings agency Moody's restated its negative outlook on the city's banking system, citing concerns about risks to lenders from rapidly expanding exposure to mainland borrowers. Hong Kong is one of three markets in Asia outside Japan that HSBC is downgrading for the third quarter - alongside South Korea and the Philippines.
But Fan Cheuk-wan, Asia Pacific managing director for Credit Suisse Private Banking and Wealth Management, said she believed that Occupy Central would not have a huge impact on the financial system as the industry had taken precautions.
"Foreign investors are more concerned whether the central government is adjusting the policy of 'one country, two systems' towards Hong Kong," Fan said, adding investors also saw judicial independence as essential.
This month, the Hong Kong government is expected to submit a report on the public consultation on political reform to the Standing Committee of the National People's Congress. The committee will next month draw up principles for the electoral reform framework.
Chan said the Occupy Central sit-in protest would begin if the committee stated principles that did not satisfy international democratic standards.
The Federation of Students, the organiser of the sit-in rehearsal, said the revised timetable was "reasonable" and it would join the protest.