No instant capital retreat from HK caused by national security legislation: economists

By GT staff reporters Source:Global Times Published: 2020/5/25 15:03:40

Hong Kong residents from all walks of life collect online signatures and hold a gathering on Sunday morning to show their support for the draft bill to safeguard the national security law to be implemented in the Hong Kong Special Administrative Region. The legal agenda was announced on Thursday night. Photo: cnsphoto



There has been no instant retreat of foreign capital from Hong Kong due to the upcoming national security legislation by China's National People's Congress (NPC) for the Hong Kong special administrative region. And, even if some foreign companies relocate their investment, others will flow in, said a leading economist at Swiss multinational investment bank UBS.

Some foreign media have been hyping the risk of foreign capital fleeing Hong Kong due to the national security law targeting Hong Kong, which is being deliberated by NPC, China's top lawmaking body, but the reality is the legislation will have no impact on capital operations in Hong Kong, one of the world's leading financial markets.

"Since the legislation has just been announced, it 's unlikely its impact will be seen in a day or two. Though there has been some impact on the Hong Kong stock market, capital retreat will not be so fast," Wang Tao, UBS chief China economist, told reporters in an interview on Monday. 

And even if some capital leaves, there will be an inflow of other capital, Wang said, noting that as the US is tightening regulations for Chinese companies listed in the US and even pushing them to delist, some will choose to list in Hong Kong. 

Amid discussions over the national security legislation, Chinese retail giant Wumei Holdings Inc is considering an IPO in Hong Kong, adding to a list of Chinese firms seeking to list in the SAR like e-commerce giant JD.Com Inc and internet firm NetEase Inc, Bloomberg reported on Monday.

"From a market perspective, [the legislation] was not expected by the investors, so naturally there are some concerns. As for whether there will be a capital retreat in the future, it will depend on implementation and on whether Hong Kong will be more socially stable over the long run," Wang told the Global Times. 

China's central government officials have maintained that the law is aimed at ensuring the long-term prosperity and stability of the Hong Kong SAR.

Chinese State Councilor and Foreign Minister Wang Yi said on Sunday that the law is "targeted at a narrow category of acts that seriously jeopardize China's national security. It does not affect the high degree of autonomy in Hong Kong. It does not affect the rights and freedoms enjoyed by Hong Kong residents. And it does not affect the legitimate rights and interests of foreign investors in Hong Kong."

"The actions taken by NPC have no impact on the daily lives, human rights and freedoms of the residents of Hong Kong, nor on all types of investment and business activities," Jonathan Choi Koon-shum, a member of the 13th National Committee of the Chinese People's Political Consultative Conference (CPPCC), the top advisory body, and chairman of the Chinese General Chamber of Commerce of Hong Kong, told the Global Times on Sunday. 

Choi said that national security and social stability is the backbone of development and a guarantee of social peace and economic prosperity. "Hong Hong can no longer continue to be in chaos," he said.

Posted in: ECONOMY

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