The Hong Kong Stock Exchange building on July 11 Photo: VCG

 

Hong Kong retains its competitiveness as a global financial hub, with little capital outflow pressure despite months of political unrest, which has dented the city's image and investor confidence, a survey showed on Monday. 

But industry insiders and analysts warned that businesses could scale back their investment in the city if the chaos persists. 

The survey conducted by the Bank for International Settlements (BIS) noted that Hong Kong remained the fourth-largest global foreign exchange market, according to a statement published on the official website of the Hong Kong Special Administrative Region (HKSAR) government on Tuesday. 

The average daily turnover of foreign exchange transactions in Hong Kong increased by 44.8 percent from $436.6 billion in April 2016 to $632.1 billion in April 2019, the statement said. Meanwhile, Hong Kong maintained its lead as the largest offshore yuan foreign exchange and interest rate derivatives market. Average daily yuan transactions were up 39.6 percent to $107.6 billion in April 2019, compared with three years earlier.

"The figures showed that transactions were normal and the local market was stable, and no large-scale capital outflow was observed," Liang Haiming, dean of the Belt and Road Institute at Hainan University, told the Global Times on Tuesday.

Months of political unrest in the HKSAR are affecting business confidence, with the risks of capital outflows rising and more investors considering moving their assets out of the city. 

The survey also came as US ratings agency Moody's on Monday changed its ratings outlook for Hong Kong to negative, claiming that the ongoing protests reveal an erosion in the strength of Hong Kong's institutions and lower government policy effectiveness. HKSAR officials firmly rebutted Moody's move, which followed the decision by another US-based ratings agency, Fitch, to downgrade the city's credit rating. 

Chief Executive Carrie Lam Cheng Yuet-ngor said it's disappointing to see Moody's downgrade, and the HKSAR government does not agree with its latest adjustment. "Still, continued instability and social unrest in Hong Kong… will inevitability undermine and affect international perceptions of Hong Kong's business environment," which should be a heads-up, Lam told a press conference on Tuesday morning. 

"The city has the capacity to maintain its strengths in the short term, but if the social unrest continues, it will definitely hurt its long-term prospects," Jacky, who works in the finance sector, told the Global Times. 

It is widely believed that the US rating agencies have become tools with political implications, industry representatives said. However, the violent and illegal acts amid social turmoil should come to an end immediately, as investors have been considering downsizing their presence in Hong Kong if the instability goes on.
Newspaper headline: HK still financially stable: survey