HK developers suffer sell-off as investors worry new security law may provoke protests, capital outflows

23-May-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Hong Kong property developers are facing the brunt of Hong Kong’s stock market sell-off amid heightened concerns Beijing’s proposed national security law for the city could stoke social unrest and erode its appeal as a financial hub.

The city’s biggest landlords of office towers and shopping malls slumped at mid-day, dragging in the broader market down by the most in two months.

Sun Hung Kai Properties, Hong Kong’s largest developer and owner of commercial complexes including the iconic IFC towers in Central, plummeted as much as 7.4 per cent to HK$91.10 in morning trading. Link Reit, which owns 126 shopping centres and offices in Hong Kong, dived 7.6 per cent to HK$62.70. Swire Properties, owner of major offices in Admiralty and Quarry Bay, declined 6.6 per cent to HK$18.92.

The benchmark Hang Seng Index tumbled 4.6 per cent at noon local time, set for the biggest pullback since March 23. A sub-index tracking property stocks slid 6.5 per cent, the worst among industry sub-gauges.

“Investors were afraid property prices will collapse and capital would flow out of the Hong Kong market,” said Kevin Leung, executive director of investment strategy at Haitong International Securities in Hong Kong. “Concerns about a new wave of protests were obviously factored in as well.”

Chinese legislators on Thursday evening revealed they will discuss a proposed law tailor-made for Hong Kong to ban all seditious activities aimed at toppling the central government.

The legislation is controversial because opponents believe this will erode Hong Kong’s long-cherished rights and freedoms, which could in turn weaken its status as a free economy and an international financial centre.

A previous attempt in 2003 by the Hong Kong government to introduce a national security bill under Article 23 of the city’s mini-constitution known as the Basic Law led to peaceful protests by half a million people in the city.

There are already calls to revive protest activities in response to the proposed law on LIHKG, an online forum that has become a major organising venue during the protest movement last year. Many are proposing a march in Causeway Bay, the city’s core shopping district, on Sunday.

A revival of protests will further strain Hong Kong’s shattered economy, after months of anti-government street protests and the subsequent Covid-19 pandemic hammered the retail and tourism industries.

Hong Kong’s landlords have already slashed prime office rents in core business districts by as much as a third, as vacancy climbed to a six-year high in Central. The city’s economy shrank 8.9 per cent in the first quarter, its worst performance since records began in 1974.


Category: Hong Kong

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