Hong Kong's business community is waking up to fresh uncertainty on Friday after Occupy Central’s demands for Hong Kong leader CY Leung’s resignation were ignored.
The passing of the protest movement’s deadline – Thursday night – was met with a press conference at 11.30pm in which Leung refused to step down.
“I will not resign because I have to continue to do the work of Hong Kong electoral reform,” said Leung, adding he would appoint a senior official to open talks with the protesters.
He warned those gathered outside not to charge police lines or occupy government buildings, which the Occupy movement had threatened throughout the day.
Protesters, many of whom are students, responded with confusion and anger, with a small group attempting to block Lung Wo road, which runs between Leung’s office and the harbour. This brought a stern response from police, who ordered protesters to move, and from other protesters keen not to provoke the police.
It is unclear what measures will be taken by the city’s banks, businesses and financial groups to the unfolding disruption. A HSBC spokesman told FinanceAsia the bank's main building in Central and its branches would operate normally on Friday, with its ATMs remaining open.
However, some businesses have already begun moving staff to back-up offices away from the hotspots of Admiralty, Causeway Bay and Mong Kok, according to media reports. On Monday and Tuesday, 23 banks and 44 of their branches were closed, according to the Hong Kong Monetary Authority.
“The finance community understands why the streets are being blocked. People are fighting for their future,” Edward Chin, hedge fund manager and organiser of the banking and finance professionals that support Occupy Central, told FinanceAsia.
Chin said support from the city’s banking industry had been good, with a lot of bankers attending the protests, taking pictures and talking to students.
This contrasts with the official stance of financial institutions, many of which appear reluctant to comment for fear of taking a side.
Many banks were open on Monday and Tuesday ahead of the two-day holiday in the city but the continued disruption casts doubt on their ability to conduct business as usual.
Mong Kok and Causeway Bay (pictured below), popular with mainland shoppers, remain cordoned off with barriers and makeshift camps, severely restricting access for workers and customers.
Sales at shops in the areas have dropped sharply since protests began, compounded by a plunge in tourists – including mainlanders who usually flock to the city on National Day (Wednesday). Beijing cancelled all tour group visits until the protests are resolved.
Jewellery store Chow Tai Fook opted to close its Causeway Bay and Mong Kok stores rather than risk damage and high-end fashion chain Prada, another destination for mainland tourists, is closing its stores early. Meanwhile, other retail outlets have reported a sharp decrease in sales.
With retail and tourism accounting for 10% of the city’s GDP, the disruption appears to validate analyst warnings prior to the protests.
Moody’s warned in September that the political tension could threaten the city’s role as an international finance centre, potentially triggering a negative credit outlook.
In addition, ANZ warned in July of the city’s “rising political tensions” with the mainland and HSBC downgraded its investment outlook for Hong Kong equities.
The Hang Seng index is expected to fall on Friday after losing 3% from Monday’s open to Tuesday’s close.
Kenneth Leung, a lawmaker representing the accountancy profession in Hong Kong, told FinanceAsia he cut short a trip to Frankfurt and Berlin, where he was meeting banks and political figures to update them on the political turmoil, to join the protest.
“I saw the business community in Europe and I gave the message that universal suffrage is good for business, not bad. It is stabilising,” he said. “They are concerned at what is happening here.”
He added that there could be dire consequences for Hong Kong’s business community if things were not handled well.
China’s government appears to be losing patience with the protest, with an editorial in the People’s Daily, the chief newspaper of the Chinese Communist Party, ominously warning on Thursday of “unimaginable consequences” if Occupy Central continues.
Protesters are seeking universal suffrage in the election of Hong Kong’s chief executive from 2017, when incumbent Leung’s tenure ends.
Beijing effectively dismissed this call when it announced on August 31 the next leader would be chosen from a pool of candidates decided by it alone.
Occupy Central was brought forward from October 1 following a student rally on Friday that was broken up by police, leading to 70 arrests, including student leader 17-year-old Joshua Wong.
A peaceful protest began but this soon turned violent on Sunday as riot police used tear gas in an attempt to clear the streets, leading to 78 arrests and 40 people injured. 91 people have been injured so far.
The show of police force lead to widespread condemnation from the international community and prompted the UK government to summon China’s ambassador. The meeting has yet to take place.
“Up until last week, we were thinking of a quiet sit-in but things changed after the students were arrested,” Chin said. “We should go for the jugular because Beijing is not offering a free choice. It [will not be] a real election.”
The protests represent the biggest disruption to business in the city since the outbreak of Sars in 2003, and possibly earlier, but they also highlight an impressive sense of teamwork and compassion.
Supporting the protesters are medical students from Hong Kong University (pictured left), social workers, translators to help non-locals understand signs and speeches, classes on democracy and a raft of volunteers bringing food and drink.
The streets are largely being kept clean and there appears to be a sizeable effort at recycling the vast quantities of water bottles and plastic containers disposed of by protesters.
But the clock is ticking, with talks between Leung’s office and protesters not set to happen until Saturday at the earliest. The Hong Kong government also suggested it wanted to clear the area around Leung’s office as early as Friday morning.
“If the police use force, for example baton charges, and people get injured the people will fight. If that happens Leung’s credibility will be gone and he might go,” said Kenneth Leung, who is also a member of the Hong Kong police complaints council.
“[But] we have to be fair to both sides [the police and the protesters]. Both sides are very tired,” he added.