News Digest

Street protests hit Hong Kong business in a painful place

The pro-democracy protests in Hong Kong over the past several weeks is hurting it in the most inconvenient of places — the wallet. A private survey on Wednesday showed activity in Hong Kong’s private sector falling by its biggest margin in three years and could be a first glimpse of the impact the protests are having on the economy. The monthly Purchasing Managers’ Index (PMI) in Hong Kong’s private sector compiled by HSBC/Markit fell from 49.8 in September to 47.7 in October, due to a decline in new orders and output. A reading above 50 indicates an expansion in activity while one below that threshold points to a contraction. A number of companies surveyed attributed the drop to the protests, which has blocked key roads and hurt business activity in the former British colony for more than a month.

The slowdown in economic activity in Hong Kong deepened in October as orders and output fell at an accelerated pace.

John Zhu, HSBC’s economist in Asia

The economy was already slowing before the pro-democracy protests kicked off in September, thanks to a drop in consumption driven by a decline in tourist spending. The PMI numbers add pressure on government officials to take remedial action as the economy suffers from the protracted street protests even though financial markets and central bank officials have downplayed its impact. Retail sales, which have faced the brunt of the impact, are in for more pain. Caroline Mak, chairwoman from the Hong Kong Retail Management Association, said the association is pessimistic over the retail sector due to the “uncertain factors”.

If we can achieve flat growth this year, we should all be clapping our hands. I will be very happy if we can still achieve zero growth.

Caroline Mak, chairwoman from the Hong Kong Retail Management Association