Banks functioned normally on Monday despite 44 branches, offices or ATMs of 23 banks being temporarily closed due to the mass protests, according to a statement from the Hong Kong Monetary Authority.
“The banking sector has ample liquidity and does not experience any tight conditions,” HKMA officials said.
“[On Monday] the Hong Kong dollar, RMB, US dollar and Euro Real Time Gross Settlement systems recorded a total transaction volume equivalent to HK$1.25 trillion, which is about normal.”
In the most recent development, the Occupy Central civil disobedience movement gave a deadline of October 1 for a government response to meet its demands for genuine democracy and for the resignation of Hong Kong’s Chief Executive Leung Chun-ying, the former Asia-Pacific chairman of real estate-focused asset manager DTZ.
Wednesday is China’s National Day, a public holiday in both the mainland and in Hong Kong that memorialises the founding of the People’s Republic of China in 1949. A larger turnout of protesters is expected.
The thousands of protestors have sparked global media coverage and extensive debate on social media and have elicited supportive comments for “peaceful protests” from the US government.
Fitch Ratings said Hong Kong’s rating will not be affected in the short term, unless demonstrations get big enough and last long enough to have a material impact on the economy.
On Monday night police closed down Connaught Road, a main thoroughfare that runs the length of Hong Kong’s Central district.
Underlying causes
The Occupy Central movement is broadly concerned about the Chinese government’s encroaching authority over Hong Kong, although recent events have catalyzed the movement.
In August, Chinese officals said Hong Kong can hold direct elections in 2017, but voters must choose from a stable of Beijing-approved candidates.
Many in Hong Kong see that as a violation of China’s promises under the Basic Law, which is supposed to allow universal suffrage.
Also underlying public discontent is disillusionment with the economy, suggested Guy Foster, group head of research at Brewin Dolphin in London, in a client note.
“Property is unaffordable and residents are geared into current high prices. Only a very long and gradual deflation of Hong Kong property prices will see the boom end well and that looks challenging to achieve without independent monetary policy.
“If US interest rates rise, as they are expected to, then Hong Kong residents will likely be the most exposed.”
Foster added that China is unlikely to get involved militarily (Chief Executive Leung has also dispelled those rumours). “At the same time [Beijing] will not want to be seen as weak and will not be able to answer the myriad of underlying issues which lurk beneath the surface of the current protests.”
Strong sentiments
The pro-democracy protest movement has created strong divisions in Hong Kong, even among the financial industry.
Earlier this year, when Occupy Central planned a sit-in demonstration in Hong Kong’s Central district, Deloitte, PriceWaterhouseCoopers Hong Kong, Ernst & Young and KPMG published a joint statement in three of Hong Kong’s prominent newspapers, saying the blockade could have an “adverse and far-reaching impact” on social order and economic development.
Employees of the Big Four accounting firms responded by publishing their own statement in the Chinese language press that rejects the opinions of their management.
According to the South China Morning Post, the employees’ statement refers to management in specific terms in Cantonese that “can also mean an expression of anger bordering on vulgarity, hinting at the strong sentiments behind the unusual public comment”.
