The latest opinion poll shows Hong Kong Chief Executive Carrie Lam’s confidence rating has fallen to an unprecedentedly dismal 9%. If you’re wondering how she manages even that – who are these 9%? – bear in mind that this is approaching what statisticians call ‘the Lizard-man constant’.
The annual Budget ritual takes place today. With the plague-ridden city in flames around him, Financial Secretary Paul Chan will insist that the HK$1 trillion-plus fiscal reserves must be conserved for a rainy day. And we can predict that he either will or won’t give everyone a few thousand bucks as a special treat, and be despised mightily for it either way. Then there will be the usual one-off handouts for the usual ‘sectors’, including subsidies for tourism and retail operators – cash that, in practice, will end up ensuring that landlords’ sky-high rents get paid for another month or two.
Bloomberg notes that the Hong Kong stock market is at its lowest compared with global counterparts, especially the Mainland market, since 2004. As the reports says, the Mainland market is more retail- than institution-driven. We could add that it is also artificially propped up by official edict. In addition, other markets round the world (like the US) are probably relatively more over-valued. Most of all, the Hang Seng Index no longer reflects Hong Kong’s domestic economy: most of its components are Mainland giants or other companies with most of their operations outside this one city. Gone are the days when it was full of quaint local companies like Lane Crawford and Wharf.
Still, even if it has little direct relation to stock-market valuations…
“Hong Kong has a rather unbalanced economy, which relies heavily on sectors like retail and tourism that will be hit hard by the virus due to less mainland visitors,” said Ronald Wan … of Partners Capital International Ltd.
If I could destroy one branch of Louis Vuitton or Burberry for every time I read that…
No – the Hong Kong economy does not ‘rely’ on retail and tourism. It would be more accurate to say it ‘depends’ on them, in the sense that an addict cannot handle life without easy relief from a daily fix. It would be even more accurate to reverse it and say ‘retail and tourism rely on Hong Kong’. Now replace ‘retail and tourism’ with ‘high rents and landlords’, and the picture becomes totally clear. These are parasites.
Paul Chan will now roll up your sleeve and let them start sucking away.