Davos: Hong Kong's Lam in Davos charm drive as protests persist

MTR

21/01/2020 12:15

(Adds HKEX chairwoman Laura Cha)
    By Anne Marie Roantree
    HONG KONG, Jan 21 (Reuters) - For Hong Kong leader Carrie
Lam the World Economic Forum in Davos is a chance to convince
global business and political leaders that the Asian financial
hub is back on track.
    After more than seven months of turmoil Hong Kong's status
as a financial centre has come under scrutiny as sometimes
violent demonstrations paralysed parts of the city and forced
businesses to close, posing the gravest popular challenge to
Chinese President Xi Jinping since he took power in 2012. 
    Lam and "Team HK", including its trade secretary, top
officials from the stock exchange, airport authority, MTR Corp
 0066.HK  and the head of Swire Group, are in the Swiss mountain
resort two days after another violent clash and more are planned
for the weekend of her return.
    Laura Cha, chairwoman of bourse operator Hong Kong Exchanges
and Clearing Ltd  0388.HK  told Reuters on Tuesday the
Chinese-ruled city had held up remarkably well despite the
protests.
    "We are resilient. We are stable and investors still have
confidence in us," Cha said in Davos. 
    "The rule of law is sound in Hong Kong."     
    Since its return to Beijing in 1997, the former British
colony has been governed under a "one country, two systems"
formula that guarantees it broad freedoms not seen in mainland
China, including an independent judiciary and free press. 
    Those liberties, which protesters say Beijing is gradually
chipping away at, are widely viewed as central to the city's
prosperity and any erosion could have a significant impact on
its status as an international financial centre. 
    "The biggest concern for foreign investors is around the
long-term position of Hong Kong as a global financial centre,"
said Benjamin Quinlan, CEO of Hong Kong-based consultancy
Quinlan & Associates and a former Deutsche Bank strategist. 
    "More importantly, there are questions around whether the
fundamental, underlying rule of law in the city will be
maintained ... and whether it will stand the test of time." 
     
    CREDIBILITY CRISIS
    Another challenge in 2020 will be to tame the protest
movement, which kicked off the year with a rally that organizers
said drew 1 million people, and bolster support for the
beleaguered government ahead of key elections in September.
    On Sunday, police fired teargas to disperse thousands
gathered in Chater Garden, a small open park ringed by the Asian
headquarters of leading global investment banks and law firms. 
    "There will be a major crisis of governability because I
think the government has no credibility and I think it faces
major resistance, both in the legislature and district
councils," said Ma Ngok, a political scientist at the Chinese
University of Hong Kong.  
    A resounding victory for pan-democrats in local elections in
November dealt a huge blow to the pro-Beijing camp and marked a
significant political shift amid months of protests that shocked
a city where violence is rare.  urn:newsml:reuters.com:*:nL4N28412F 
    As the protest movement still enjoys broad support, some
observers expect Beijing to lean harder on the city to silence
activists and curb a surge in anti-China sentiment that has
rattled mainland Chinese living in Hong Kong and prompted some,
including many students, to leave.  urn:newsml:reuters.com:*:nL8N27U054
    Others expect the deep-seated political tensions to
intensify and further polarize society. 
    "By summer we shall witness deeper political conflict within
society, coinciding with crippling economic actions and feeding
of growing disenfranchisement of working and middle classes,"
said Phill Hynes, head of political risk and analysis at ISS
risk.  
    "2020 is not going to be the year Hong Kong heals, it will
be the year it festers and becomes inflamed."
    A survey conducted for Reuters in December found 59% of city
residents supported the protest movement, while 57% said they
favoured the resignation of Beijing-backed Lam.  urn:newsml:reuters.com:*:nL4N2910TI
    President Xi has repeatedly voiced support for Lam, who has
rejected calls to step down. According to an audio recording
obtained by Reuters of remarks Lam made to a group of business
people in August, Hong Kong's leader said she would "quit" if
she could.  urn:newsml:reuters.com:*:nL3N25U0BE
    In public, Lam remains defiant and rejects any link between
the protests and political reform.
    "Hong Kong is not alone in facing social problems related to
topics such as upward mobility, youth discontent, income
disparity and housing affordability," she said in the Jan. 16
release. "We know we need to deal with these issues, and we
will."
    While the demonstrations have at times closed businesses,
shopping malls, schools, and even the international airport,
life for many in the city goes on, while Hong Kong's financial
markets have proved resilient. 
    The unrest has, however, drawn corporate heavyweights
including HSBC  HSBA.L  and Cathay Pacific  0293.HK  into the
political turmoil, underscoring the tightrope businesses must
navigate between protesters and the city's political masters in
Beijing.  urn:newsml:reuters.com:*:nL4N2970MV  urn:newsml:reuters.com:*:nL4N25F1OH
    The protests have also taken a heavy toll on the economy -
which sank into recession for the first time in a decade in the
third quarter - in particular the retail and tourism sectors. 
    The Hong Kong administration has pledged HK$35 billion in
stimulus to prop up the economy but some analysts say it is
unlikely to have a major impact as long as the unrest continues.

 (Additional reporting by Sumeet Chatterjee; Editing by
Alexander Smith)
 ((annemarie.roantree@thomsonreuters.com; +852 97387151; Reuters
Messaging: annemarie.roantree.thomsonreuters.com@reuters.net))