Tue, Sep 30, 2014 - Page 15 News List

HK protests hit banks, business, travel

RESISTANCE:While demonstrations caused schools, transport routes and financial institutes to close down, the stock exchange insisted on continuing operations

AFP, HONG KONG

Hong Kong’s shares tumbled yesterday and the Hong Kong dollar hit a six-month low against the greenback as pro-democracy protests shut down many schools, businesses and banks in the territory.

As demonstrators refused to back down on their demands for China to grant Hong Kong universal suffrage, fears of a long stand-off saw investors sell shares in major banks, including HSBC and Standard Chartered.

In response, the stock exchange said trading would continue as normal while the de facto central bank sought to reassure investors by making liquidity available to support the banking system. The city’s financial head also said the Hong Kong government was tracking events on markets.

However, the Hang Seng Index sank 2.2 percent at one point before paring some of the losses to end 1.9 percent lower.

“We are likely to see [a] major sell-off and volatility for days to come” in the Hong Kong stock market, said a report by New York-based advisory firm JL Warren Capital.

It said those likely to be hurt most would be Hong Kong-listed retailers such as luxury businesses selling products purchased by mainland tourists and local and Macau tourism businesses.

The protest will be felt especially in the retail sector as the Chinese Golden Week holiday begins tomorrow — usually a time when big-spending Chiense visit Hong Kong’s numerous shopping outlets.

Australia and New Zealand Banking Group Ltd senior economist Raymond Yeung (楊宇霆) said the protests will “add salt to the wound” of the retail industry, already reeling from a slowdown in the Chinese economy.

While the trouble had subsided by yesterday morning, crowds of defiant demonstrators still controlled a number of major thoroughfares and intersections in the congested territory.

Banks, jewelery shops and clothes stores in Mongkok remained closed.

The Hong Kong Transport Department said more than 200 bus routes were suspended or diverted, while central sections of the tram network were also down.

The underground rail service was largely unaffected, but multiple station exits in the busy districts of Causeway Bay and in Admiralty — where many international businesses are located — were barricaded by protesters. Some exits at Mongkok were also blocked.

The stock exchange insisted it would continue to operate as normal, but the Hong Kong Monetary Authority (HKMA) said 17 banks were forced to close 29 branches across the territory.

Standard Chartered, HSBC Holdings, Bank of East Asia (東亞銀行), the Bank of China (中國銀行) and China Citic Bank Corp (中國國際信託投資) were among those who said their operations were affected.

The HKMA said the Hong Kong interbank markets would function normally yesterday.

“The Currency Board mechanism will also function normally to maintain the stability of the Hong Kong dollar exchange rate,” it said. “The HKMA will also inject liquidity into the banking system as and when necessary under the established mechanism.”

Later it announced there was still ample cash in the banking system. It also said the exchange rate remained generally steady despite the Hong Kong dollar slipping to 7.76 against the greenback — its lowest since March.

The dollar is pegged to the US unit, but can move within a band of 7.75 to 7.85.

Hong Kong Financial Secretary John Tsang (曾俊華) urged investors to keep tabs on possible risks, adding that the “government will closely monitor the market situation and strive to maintain normal operations.”

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