Typhoon Kompasu to cost HK between HK$2 billion and HK$3 billion in economic losses

14-Oct-2021 Intellasia | South China Morning Post | 5:53 AM Print This Post

The lengthy disruption to business caused by Typhoon Kompasu will cost Hong Kong anywhere between HK$2 billion (US$257 million) and HK$3 billion, according to economists.

Chinese University associate professor of economics Terence Chong Tai-leung on Wednesday put the economic loss caused by Kompasu at about HK$3 billion, based on the average value of the gross domestic product (GDP) generated in one day, taking reference from last year’s overall GDP figure of about HK$2.7 trillion.

“Even if most businesses remain closed during the day, some economic activities are still going on. We can only estimate Hong Kong has lost a certain percentage of one day of GDP,” he said. “I’ll put the figure at about HK$3 billion.”

Plastic sheeting is wrapped across the entrance of the closed Exchange Square building, which houses the stock market, in Central on Wednesday. Photo: Nora Tam

Plastic sheeting is wrapped across the entrance of the closed Exchange Square building, which houses the stock market, in Central on Wednesday. Photo: Nora Tam

Kompasu named after the Japanese word for compass forced Hong Kong into shutdown mode on Wednesday. Schools and government services were suspended alongside trading on the stock market, while businesses remained closed, flights were cancelled and the race meeting called off.

The Hong Kong Observatory had issued the No 8 typhoon warning signal the third-highest at 5.20pm on Tuesday as Kompasu came within 500km of the city, threatening to unleash another round of the gale-force winds and torrential rain that Tropical Storm Lionrock brought last weekend.

The Observatory downgraded Kompasu to a No 3 warning signal at 4.40pm on Wednesday.

Chong said the loss in traders’ earnings would be about 1 per cent of the daily turnover at more than HK$1 billion, while the impact on other industries, such as the catering sector, would be more limited at about several tens of millions of dollars.

The stock market has a daily turnover of about HK$180 billion.

“A few days of business shutdown throughout the year caused by typhoons are expected as long as the duration is not too long,” he said.

Ryan Lam, head of research for Shanghai Commercial Bank, put the economic loss at no more than HK$2 billion based on one day of GDP.

“The actual economic loss caused by Kompasu is very small, particularly if we compare it with the impact of the [coronavirus] pandemic,” he said, adding the banking and retail sectors would be the biggest casualties of the typhoon as they had to close their physical shops and halt trading activities.

Ray Chui Man-wai, chair of catering industry body Institute of Dining Art, estimated that the food and beverage sector with about 16,000 restaurants would suffer a total loss of more than HK$100 million, compared with last year’s overall earnings of HK$79.4 billion.

“Many restaurants have closed, while for those which are still open, their business is down by at least over half. So I estimate the catering sector will lose about at least half of its daily takings,” he said.

Chui, the chair of Kam Kee Holdings, said its 26 restaurants remained open despite the No 8 warning signal as he wanted to continue providing service to customers who might still feel the need to dine out.

Each restaurant would lose more than HK$20,000 a day even if it stayed open as the company had to pay staff extra to come in during the typhoon, he said.

Eddie Lam Kin-wing, president of Hong Kong Construction Association, said the construction sector’s daily turnover was about HK$1 billion, 15 per cent of which would go to the contractors.

“In other words, a daily income of about HK$150 million owed to the city’s contractors may be affected,” he said. “The losses include the expenses related to management staff’s wages, bank interests, insurance fees and rent for construction machines.”

The typhoon also forced the cancellation of the regular racing meeting in Happy Valley. In deciding at 11am to call off the event slated to begin at 7.15pm, Jockey Club officials said they took into consideration the four hours or more needed to mobilise the required 8,000-strong workforce and the challenges of bringing horses from Sha Tin. While the eight-race fixture would have attracted betting turnover of somewhere in the vicinity of HK$1.25 billion and betting duty of well over HK$100 million paid to the government those losses will be recouped at a replacement meeting on December 29.

https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3152207/typhoon-kompasu-cost-hong-kong-between-hk2 billion?module=lead_hero_story&pgtype=homepage

 

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