June 10, 2023

In deep recession, Hong Kong eyes comeback with rugby and bank meeting

Hong Kong, China – Simon Friend, 35, was working from home in Amsterdam last month when he heard rumblings that Hong Kong would finally reopen to the world.

Friend, a supporter of the Hong Kong Rugby Sevens, the city’s biggest sporting event, Malti can hardly wait to book a flight.

The tournament, which runs from November 4 to 6, will be held for the first time in two years after Hong Kong lifted some of the world’s strictest COVID-19 restrictions, including mandatory hotel quarantine for arrivals.

“This is my 25th Hong Kong Rugby Sevens, it’s safe to say I’m a big fan,” Friend told Al Jazeera.

“Two years since I have seen friends and relatives there. The absence of hotel quarantine and the opportunity to participate in the Sevens event was a matter of course for me. win-win.”

“Sevens is the best party of the year in Hong Kong every year,” he added. “It’s the best reason to have a few drinks and dress up in fancy dresses and party.”

The Hong Kong Rugby Sevens drew tens of thousands of visitors from around the world before the pandemic hit [File: Tyrone Siu/Reuters]

Hong Kong’s government hopes the sporting event, along with a high-profile international banking summit that began on Tuesday, will signal that the city is open for business amid fears about its status as an international financial hub.

Still, visitors to the city must endure restrictions long abandoned elsewhere, including multiple COVID tests, mask mandates and a three-day monitoring period during which places like restaurants and bars are off limits.

Those who do come will find a city in decline, its economy battered by severe pandemic restrictions and a sweeping Beijing-led crackdown on dissent.

Hong Kong’s retail and tourism sectors were already reeling from 2019’s pro-democracy protests, when the government’s harsh response to COVID-19 plunged the city into its second recession in three years.

Hong Kong’s “dynamic zero COVID” policy, including a hotel quarantine, severely disrupted the city’s businesses and triggered a record exodus of skilled professionals from the city.

Financial firms such as Citigroup have moved some key personnel and operations out of Hong Kong, while US fashion giant VF Corp and French IT services firm Capgemini have moved their regional headquarters to Singapore.


Founded in 1976, the Hong Kong Rugby Sevens was by far the city’s biggest money-making sporting event before the pandemic, attracting tens of thousands of visitors from around the world.

For the Hong Kong Rugby Union, which relies on the Sevens for 95 percent of its annual revenue, the tournament’s revenue is seen as mere survival.

“The last three years have been devastating for the union and the rugby community,” Robbie McRobbie, chief executive of the Hong Kong Rugby Union, told Al Jazeera.

– Since we haven’t had a tournament since 2019, we’ve raised over HK$250 million [$31.8m] losses, which has resulted in half of our staff losing their jobs.”

McRobbie said the race is an important sign that the city is “recovering” and open for business.

“Normally we only sell 20,000 tickets locally, but we’ve already sold around 26,000 tickets so we’re already ahead – we’re happy with domestic demand and we really appreciate the continued support of the local community,” he said.

Still, McRobbie said the restrictions — including testing and mask-wearing requirements at the event itself — are keeping international visitors, who typically make up about half of the 40,000 spectators.

“Our fans want to enjoy Hong Kong’s nightlife when they come to the city,” he said.

Real estate magnate Allan Zeman, known as the godfather of the Lan Kwai Fong party district, said the end of the quarantine, while a “breath of fresh air”, was not enough to bring visitors back to Hong Kong.

“Tourists are definitely the last piece of the Hong Kong puzzle, but they will not come back under the 0+3 restrictions,” Zeman told Al Jazeera, referring to the three-day entry control period that prohibits. those from places like restaurants and bars.

Zeman, who is also an adviser to the government, believes that Hong Kong leader John Lee probably erred on the conservative side because of the recent Chinese Communist Party congress.

“Nobody wanted to take a chance on an upset [Beijing] that week,” Zeman said.

“I think the government here decided it’s not the right time to go 0+0, that ‘0+3’ was already as much as they can go now.”

Hong Kong banks skyline view.
The Hong Kong government hopes that its banking summit, which will be held on 1-3 November, indicates that the financial center is open for business [File: Bobby Yip/Reuters]

Bank managers and other finance managers who will participate on 1.-3. to the Global Financial Leaders’ Investment Summit conference in November, get a break from the restrictions faced by other passengers.

The Hong Kong Monetary Authority (HKMA), which hosts the Global Financial Leaders’ Investment Summit, said in a statement that government-approved “contagion control arrangements” would be in place to ensure “necessary facilitation” for participants to attend the summit and conduct business. HKMA has emphasized the importance of the event in person so that guests can meet staff and customers and build relationships.

With the exception of JPMorgan Chase CEO Jamie Dimon, who was granted a controversial exemption from the city’s quarantine rules at the height of the pandemic, the summit will be the first time some of Wall Street’s biggest names have touched down in the financial center. since the start of the pandemic.

Zeman, who will attend the summit, said the event is a “vote of confidence in Hong Kong”.

“These institutions,” Zeman said, “have always considered Hong Kong their Asian headquarters.”

Zeman said Hong Kong’s status as a gateway between East and West makes it an ideal location for such an event.

“China is too big and too important a market for any bank in the world to turn its back on,” he said.

Others are less optimistic.

Asian Shadow Financial Regulatory Committee chairman Martin Young, a professor at New Zealand’s Massey University, said the partial reopening of Hong Kong would not be enough to revive the economy this year.

“It is important [Hong Kong] to open up as quickly as possible,” Young told Al Jazeera. “The lifting of all the COVID pandemic measures will certainly have a positive impact on domestic consumption and visitor consumption, but that’s only part of the problem facing Hong Kong.”

As economic woes deepen and calls for an end to all restrictions grow, Hong Kong Chief Executive John Lee has introduced measures to attract talent and investment, including a HK$30 billion ($3.8 billion) fund to support business in the region. city.

Hong Kong Chief Executive John Lee waves as he enters the Legislative Council session in Hong Kong.
Hong Kong CEO John Lee has introduced a series of measures to attract talent and investment to the city [File: Vernon Yuen/AP]

Gary Ng, senior economist at Natixis, said such announcements are welcome but are stopgap measures.

“It will be cheaper for the government and society with a completely reopened business environment,” Ng told Al Jazeera.

“If another year continues with a fiscal deficit, the Hong Kong government is unlikely to be able to afford to spend more and will have fewer resources for long-term issues if growth does not pick up.”

Investors’ confidence in the city’s ability to survive the crisis has weakened. Reports of China’s slowing economy and delayed economic data last week sent the Hang Seng index falling to 15,180, its lowest since the 2009 financial crisis.

Ng said the government bears the blame for “80 percent of the recession risk it faces”.

“While the government cannot control the politics of mainland China, it has room to change its approach by removing all restrictions related to COVID.”

Young said the city should move fully into living with the virus like the rest of the world, including rival Singapore, which last month overtook Hong Kong as Asia’s leading financial center in the 2022 Global Financial Index.

“Could Hong Kong have handled COVID better? “It’s a lot easier to determine best practices after the fact, but if there was a place that you could say did the best, I’d give it to Singapore,” Young said.

“I think now is the right time for Hong Kong to follow Singapore’s lead in dealing with COVID.”

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