HONG KONG - Business confidence continues to be pummelled as violent protests took place for the eighth straight weekend.
In a statement on Monday (July 29), the American Chamber of Commerce (AmCham) in Hong Kong said its members were already reporting "serious consequences" from the disruption caused by weeks of mass demonstrations, varying from an immediate hit to revenue caused by disruption to supply chains and consumption, to longer-term doubts over cancelled events and shelved investments.
In a straw poll conducted last week (July 23-25), 38 per cent of the 147 AmCham respondents said they were pessimistic over the short term but confident that Hong Kong will bounce back.
Some 33 per cent believed the city's long-term prospects have been irreparably damaged while 12 per cent said they were optimistic about short-term difficulties being resolved. The remaining number in the survey either felt the same as before or did not agree with any of the options.
Respondents also reported a deepening perception within their companies and among overseas customers that Hong Kong has become less safe and a riskier place for business, AmCham said, adding that members believed the primary beneficiary of Hong Kong's decline would be Singapore.
Said AmCham president Tara Joseph: "AmCham urges the government to stem any further damage and show clear leadership in meeting the expectations of Hong Kong people and in restoring the city's international reputation for effective governance under the 'one country, two systems' framework."
She added that a clear majority of AmCham members surveyed believed the Hong Kong government needs to address the underlying causes of the protests "and not simply to paper over the cracks of social instability with a short-term law-and-order fix".
AmCham members in sectors ranging from financial services to logistics and tech are urging the government to formally and completely withdraw the highly contentious extradition Bill and to convene an internationally credible independent inquiry into all aspects of the recent unrest.
The Hong Kong General Chamber of Commerce (HKGCC), which represents companies that hire a third of the local workforce, declined to comment when approached by The Straits Times.
In a statement released on July 22, it condemned the violence led by a small number of radicals and called for a permanent shelving of the Bill, as well as an inquiry.
The HKGCC noted that the protests had become more confrontational, "while factions are being created that pit citizen against citizen". "The situation is also raising concerns in Hong Kong and internationally about our commitment to the Basic Law and the rule of law."
In a sign of growing concerns about safety and increasing anti-China sentiment in the city, the tourism and retail sectors are feeling the squeeze.
The Hong Kong Retail Management Association (HKRMA) on July 16 said a majority of its member companies reported a "single to double digit" drop in sales value for the month of June and in the first week of July.
July and August are the peak business seasons for retailers but many are expecting a double-digit drop in business in the next few months as the protests spread.
In the light of the unrest, the HKRMA has adjusted its original forecast on the city's total retail sales value from single-digit growth to double-digit drop for the whole of 2019.
ING's Greater China economist Iris Pang said the protests could lead to a vicious circle.
"The consumption sector is going to weaken, which will put pressure on the job market of the retail sector, which in turn will further dampen consumption," she said.
Tourism, which is a big mainstay for the retail sector, has also been hit with travel advisories being issued by several countries following the unrest.
Singaporean Wu Lizhuang, 36, was originally planning a shopping and dining trip to Hong Kong at the end of the year but decided recently to pull the plug on the trip.
Ms Wu, who works as a producer, said she did so in the light of the unrest, especially after the Singapore Ministry of Foreign Affairs had issued a travel advisory.
"Safety is a concern because attacks can even happen at the train station, so there is a worry that clashes can take place anywhere," she said, referring to the incident at Yuen Long train station a week ago (July 21) when masked men attacked protesters and passengers.
The unprecedented protests, which was triggered by Chief Executive Carrie Lam's push to amend an existing extradition law, has spilled over to the city's relatively resilient financial market.
CMC's Margaret Yang told ST that of the 50 Hang Seng Index constituents, 48 were trading lower on Monday, underscoring the prevailing negative sentiment.
"The ongoing protest and riot has started to erode investor confidence about the city's future, in particular the real estate, luxury retail, tourism and even public transportation sector," she said.
Ms Yang added that property counters of Wharf Real Estate Investment Co., New World Development Company, Central China Real Estate, Henderson Land and CK Asset Holdings were plunging on Monday, down on average of 3 per cent to 4 per cent.