Is Hong Kong on the "brink of a total breakdown"? That was how one police spokesman described the situation after a week that saw anti-government protesters block roads in the central business district. Lawyers and bankers have been joining "radicals at the barricades" during their lunch breaks, says Amy Gunia in Time.
The violence "on the doorstep of some of the world's largest banks" caused the territory to plunge into recession in the third quarter. Tourist arrivals are down by a third over the past year.
The violence has also begun to weigh on local markets. Mainland companies make up about 70% of the Hong Kong Stock Exchange. That should make equities' performance more tied to developments on the mainland than to turbulence in the former British colony.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Yet the city's Hang Seng index is down 2.5% over the past six months as the mainland's CSI 300 index has gained 9%. Falling prices for local financial and property firms have dragged down the broader index, explains Zhang Shidong for The South China Morning Post.
A recent Morgan Stanley report predicts that the Hang Seng will continue to underperform other Chinese stock indices. Faced with its "worst business outlook since the 2008 financial crisis", Hong Kong's corporate earnings are going nowhere fast, says Bloomberg News. Mainland-listed China A shares are "28% more expensive than their Hong Kong-listed peers".
Not everyone is so gloomy, says Sherisse Pham on CNN. Investors were this week "falling over themselves" to buy into Alibaba's secondary listing in Hong Kong That enthusiasm is "a vote of confidence in the Asian financial hub", despite the current unrest. It could also "cement the Hong Kong Stock Exchange's status as 2019's largest venue for public offerings."
