Despite street protests, Hong Kong's global image remains untarnished
While one index ranks city's civil unrest level below Liberia and North Korea, traditional ratings agencies say it is business as usual
As pro-democracy protesters hold out into a second week of a civil disobedience campaign, there are few signs that dramatic images of Mong Kok street brawls or a barricaded city centre are having any tangible impact on the city's global reputation.
"What is happening here is the same thing that happens in other low-risk places. You have demonstrations in London, New York and Paris, and they don't get labelled high risk just because they have had some demonstrations," said John Barclay, the managing director of Primasia Corporate Services, a company incorporation specialist. "Every single [business] inquiry in the [Primasia] pipeline is proceeding as if nothing has happened."
The mostly good-natured demonstrations have drawn ire from local politicians and business leaders concerned at any possible erosion to the carefully sculptured image of Hong Kong as a safe, business friendly, trading hub.
However, according to one risk consultancy, this image now has some scuff marks. The protests have pushed the city's social stability below that of strife-torn Liberia and the hermit nation of North Korea, according to an index published yesterday.
The Civil Unrest Index, from British risk consultancy Maplecroft, assesses the likelihood that economic, social and political factors will trigger strikes, protests, ethnic or religious clashes or other conflicts. In the fourth quarter, Hong Kong was assigned a civil unrest reading of 4.86, against 4.9 for North Korea and Liberia. A score of zero indicates the highest risk, with a reading of 10 the lowest risk.
Maplecroft's reading of the risks to Hong Kong stability from the political stand-off contrasts starkly with the far more sanguine assessment of global ratings agencies and investors.
Still, ANZ Banking Group estimates that the city lost HK$2.2 billion in retail sales as a result of the protest zones blocking access to shops and a move by the mainland authorities to cancel tour groups during the week-long National Day holiday.
Overseas, the demonstrations made front-page news but consultants say few, if any, companies are reassessing whether to come to Hong Kong, as the city remains, alongside Singapore, one of only two respected common law jurisdictions in the fast developing Asian region.
"People use Hong Kong for stability and the rule of law it brings. Is that stability now gone? Most people would say no," said Howard Bilton, the chairman of global corporate services firm Sovereign Group.
"We are not aware of any slowdown or concerns" from clients, said Antoine So, the public relations head at InvestHK, a government department charged with helping foreign businesses move to Hong Kong.
Demonstrations started late last month, led by high school and university students angry that planned reforms to the chief executive electoral system offered no platform for non-establishment candidates. Within a week, the protests brought hundreds of thousands of people out onto the streets after a controversial use of tear gas by police quickly gave cause to a groundswell of seething discontent.
After protester numbers began dwindling last weekend, the stability of the city's credit rating was reaffirmed on Monday by ratings agencies Moody's and Fitch, neither of which sees the demonstrations affecting Hong Kong's economy in the medium term, even though government and student negotiations have yet to begin.
"The key pillars of the [Special Autonomous Region's] economy that provide more than half of its output - trade and logistics, financial, and professional services - do not seem to be directly affected by the political disorder. Moreover, its economy has proved resilient to previous downturns, such as during the 2008-09 global financial crisis and the Sars epidemic," according to a Moody's statement.
Mindful of that resilience, Hong Kong Advisian, the newly set-up advisory unit of engineering firm Worley Parsons, opened its Asia head office in the city on Tuesday as part of a global rebranding. The firm said it remained focused on the opportunities that Hong Kong afforded.
"[People] weren't spending a lot of time talking about what was happening other then talking about traffic jams," chief executive Dennis Finn said of the mood at the advisory's launch party.
Steve Vickers, the chief executive of SVA, a specialist risk consultancy, said international clients were surprised and bemused by events, but not concerned.
The danger comes if there is any push back against the media or judiciary by the government or Beijing once the protests have died down. "That could move the needle," said Vickers.
