Don’t discount the millions of Hongkongers who voted with their feet – by staying
- Many Hongkongers who are eligible to live elsewhere have not moved, a testament to their confidence in the city
- And a disappointing stock market performance is no indicator of poor economic prospects – Hong Kong has gone through some low points, but bounced back each time
People choose to live in Hong Kong. The vast majority of the population have the option to live elsewhere, in a country equally rich or richer. In addition to 84,000 Americans, there are about 300,000 Canadians, 100,000 Australians and 37,000 Britons, among many other foreign nationals.
Around 5.4 million residents – nearly three out of four Hongkongers – are British National (Overseas) status holders, or dependants or children of BN(O) holders, who are eligible to live in the United Kingdom under a “bespoke” immigration policy. By the end of 2023, only 157,576 people, less than 3 per cent, have taken up the offer.
There is a free flow of information and a free flow of capital. Tax rates are low, at about 15 per cent for personal income and nil for capital gains and dividends. Almost all imports are duty-free. Both English and Chinese are official languages. The streets are extremely safe even at night. There are direct flights to and from all major metropolises in the world.
Beijing wants Hong Kong to reinvent itself. Does it have courage to be bold?
The most glaring example is China, whose economy expanded by about 12 times in 30 years, but the MSCI China stock index has declined 58 per cent in that time. Hong Kong’s stock market had seen sharper drops than the most recent one, and each time it bounced back.
From peak to trough, it dipped 56 per cent between 1997 and 1998; 53 per cent between 2000 and 2003; and 59 per cent between 2007 and 2009. Now it has fallen about 50 per cent from its 2018 high. Who can say it won’t bounce back again? Typically, bulls roam at the market peak and bears come out at the bottom. Given this history, when bears are roaring, is now a good time to run away from the market?
Roach’s bearish view on Hong Kong is based on his conviction that its growth will decelerate in tandem with mainland China’s. Statistically, however, Hong Kong’s economy has in fact been much more correlated with the United States than with mainland China. In terms of real gross domestic product, its growth trajectory almost hugs that of the US, up 2.3 times in 30 years versus America’s 2.1 times. Both pale in comparison to China’s expansion.
Nobody has a crystal ball to tell the future. But there is no reason for gloom. Hong Kong’s institutions under the framework of “one country, two systems” have endured, as has its way of life. The city has gone through some rough patches, to be sure.
Weijian Shan is the author of “Out of the Gobi”, “Money Games” and “Money Machine”. The views expressed in this article are the author’s own