A State Council think tank will study the economic impact of Occupy Central, with a key focus on whether pro-democracy protests have fundamentally shifted investor views about Hong Kong and the mainland. A source with direct knowledge of the study said it aimed to gauge if investors had changed their assessment of Hong Kong and its economic prospects in the wake of the demonstrations. It would also seek to understand how money managers thought it might affect the keenly awaited 550 billion yuan (HK$694 billion) Shanghai-Hong Kong Stock Connect scheme that will directly link share trading in the two cities. That scheme had been expected to start by the end of the month but sources in financial markets say they are being told to expect delays of several weeks. "This is the most important issue in Hong Kong now," the source, speaking on condition of anonymity, said of Occupy. Analysts from the State Council's Development Research Centre have been studying Occupy's potential impact since spring, when speculation was swirling about whether the civil disobedience campaign would have enough momentum to get people on to the streets. Demonstration plans were set into motion when Beijing announced in August electoral reform proposals that fell short of campaigners' demands. Occupation of key streets outside various city locations caused substantial traffic disruption but have had varying degrees of impact on business. Hong Kong financial markets, among the world's biggest and most systemically important, functioned smoothly from the most intense early days of the protests without significant pressure on the currency board system that pegs the Hong Kong and US dollars and is regarded as the key measure of investor faith in the city's economic stability. An initial sell-off on the stock market was quickly replaced by successive rallies as investors picked up shares that were battered by the knee-jerk selling. The Hang Seng Index closed 0.46 per cent higher yesterday, but it remains about 8 per cent below an early September peak. Foreign investors also chalked up their 14th straight week of fund flows into the city's stock market although evidence is building those flows were being targeted towards companies with a big business base on the mainland at the expense of purely Hong Kong-oriented firms. The retail sector arguably felt the biggest impact as protests spanned the typically free-spending nationwide "golden week" National Day holiday, when tens of thousands of mainland tourists visit Hong Kong. Restaurants complained of losses as they were forced to close early because of disruption to food deliveries. Analysts said as much as HK$2.2 billion could have been lost from retail sales, about 6 per cent of monthly sales. But the short-term blip is broadly regarded by international investors as insignificant. Ratings agency Fitch said yesterday much would depend on the path chosen to allow the implementation of effective policymaking in Hong Kong. Meanwhile, the government welcomed a study by the Fraser Institute that rated Hong Kong as No1 in terms of economic freedom even as it cited risks to that status. "The perception or suggestion that the rule of law is threatened by encroaching mainland influence in Hong Kong's legal system is totally unfounded," the government said.