Some of Hong Kong’s biggest banks yesterday published full-page newspaper advertisements calling for the preservation of law and order in the territory and condemning violence, as weeks of pro-democracy protests show no sign of abating.
HSBC Holdings PLC, Standard Chartered PLC and Bank of East Asia Ltd (東亞銀行), which published the advertisements in major newspapers, urged the restoration of social order.
Continuing protests could worsen the effects on the territory’s economy, especially for small and medium enterprises, Bank of East Asia said on Wednesday after reporting a 75 percent plunge in its first-half net profit due to loan write-downs in mainland China.
Photo: AFP
The protests are already exacting a toll on Hong Kong’s economy and tourism, with the territory on the verge of its first recession in a decade.
Standard Chartered said in the advertisements that the bank supports the territory’s government to uphold social order and “guard the status of Hong Kong as an international financial center.”
HSBC said that all parties must resolve disagreement through communication rather than violence.
Neither HSBC nor Bank of East Asia referred to the government in their advertisements.
Hong Kong stocks are poised for their worst quarter since 2015 and corporate earnings are unlikely to save them.
After a sell-off erased more than US$600 billion from the territory’s equities, attractive valuations stood as a potential bright spot, but those multiples do not look so good when analysts keep slashing their profit forecasts for this year.
Their call for an average 19 percent slump in operating income would be the biggest contraction for Hang Seng Index companies since the global financial crisis, data compiled by Bloomberg showed.
While a protracted US-China trade dispute and a weak yuan are to blame for a big chunk of the profit reductions, the latest cuts reveal a deeper issue.
With Hong Kong’s slowing economy buckling under the pressure of 11 weeks of protests, demand for everything from bank loans to utility gas might be jeopardized.
“The third quarter could be even worse given the local political situation and the trade war escalation,” Amber Hill Capital Ltd (安山資本) asset management director Jackson Wong (黃志陽) said. “Potential downside surprises have not been fully reflected in share prices.”
A weak yuan is also bad news for the Hang Seng Index: Its firms get an average 64 percent of revenue from the mainland and 22 percent from Hong Kong, Morgan Stanley calculated.
The currency broke past the key HK$7 per US dollar this month for the first time since 2008, and has traded weaker than that level for more than two weeks.
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