Hong Kong tallies cost of unrest as protest march looms

Protests contributed 2 percentage points to last quarter's contraction, cost MTR $278m

A protester throws a Molotov cocktail at an MTR station after a day of protests in Hong Kong, on Dec 1, 2019.
A protester throws a Molotov cocktail at an MTR station after a day of protests in Hong Kong, on Dec 1, 2019.PHOTO: REUTERS

Hong Kong's economy is feeling the effects of ongoing protests as a top government official said the violence had contributed two percentage points to last quarter's economic contraction. Rail operator MTR Corporation added that the unrest had cost it an estimated HK$1.6 billion (S$278 million).

With protests entering their sixth month, the city is counting the full cost of shut businesses, cancelled conferences and visitors staying away from a territory where tourism is a key economic driver.

The relative calm of recent days could come under strain tomorrow, with a large-scale protest march given the green light. Any resumption of violence could add to the city's economic troubles.

Financial Secretary Paul Chan told lawmakers that the recent social unrest has taken two percentage points off Hong Kong's economy, contributing to the 3.2 per cent contraction in the third quarter compared with the previous one.

The city sank into recession for the first time in a decade during the third quarter of this year, after gross domestic product contracted for two consecutive quarters.

Already under pressure from a protracted trade war between the United States and China, Hong Kong's economy was hit further by the violent protests.

Mr Chan on Wednesday pledged an extra HK$4 billion in new relief measures, taking total stimulus plans to HK$25 billion.

He said these programmes are aimed at supporting small and medium-sized businesses in a bid to protect jobs, and that the ongoing unrest has shaken investor confidence in the Asian financial centre.

In a filing to the Hong Kong Stock Exchange yesterday, MTR Corporation said it expects the HK$1.6 billion drop in full-year net profit as a result of a 14 per cent decrease in ridership during the protests, as well as damage to its facilities.

Pro-democracy protesters set fire to the entrance gate of Whampoa MTR station in Hong Kong on Dec 1, 2019. PHOTO: AP


Demonstrators started targeting metro stations and malls owned by MTR after the company allowed police into its premises.

They trashed the stations and flooded concourses using firefighting equipment, while overground lines had debris thrown on it. On several occasions, activists stopped train doors from closing to disrupt the morning rush-hour commute. The entire rail network was shut for two days in October.

Having a small, compact and open trade economy has also meant that effects either way can be felt very quickly, said Oanda Asia-Pacific senior market analyst Jeffrey Halley.

"It's a matter of scale and this has been going on for a long time now - it's gone across each season, all the Chinese (tourists) aren't spending there so it's striking hard at big parts of the economy," he said.

Protests escalated in June over a contentious extradition Bill that was withdrawn three months later. Clashes between riot officers and protesters raged until last month when pro-democracy politicians romped to a landslide victory in district elections.

An anti-government protester throws a petrol bomb during a clash with police at Hong Kong Polytechnic University in Hong Kong on Nov 18, 2019.  PHOTO: REUTERS

The lull in tensions faces a test with a peaceful march planned for tomorrow. It is the first to have been granted approval by police, who have banned previous marches, citing violence.

"We hope our citizens can show the whole world that Hong Kong people are capable of holding a large-scale rally in an orderly and peaceful manner," said police commissioner Chris Tang.

A version of this article appeared in the print edition of The Straits Times on December 07, 2019, with the headline 'Hong Kong tallies cost of unrest as protest march looms'. Subscribe