Hong Kong businesses welcome new security law despite residents' fear

Hong Kong

CHINA'S new security law has sent fear coursing through many Hong Kong residents, but the city's commercial community has largely embraced it as a way to get back to doing business.

The controversial legislation has granted mainland Chinese authorities unprecedented control as they seek to end the pro-democracy protests that plunged Hong Kong into turmoil last year.

Despite warnings from rights groups and legal analysts that it could be a fatal blow to the city's legal autonomy and political freedoms, many in the business community have welcomed the law as a way to restore stability.

The Hong Kong General Chamber of Commerce described the passing of the law earlier this week as "instrumental in helping to restore stability and certainty to Hong Kong, which has been severely impacted by the social unrest since last year".

"We need a stable environment which the (security law) aims to provide," it said.

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British banking giants HSBC and Standard Chartered - both with a major presence in Hong Kong and on the mainland - joined other firms in publicly backing the law last month.

Analysts and members of the business community have said the law could add to the risk and complexity of doing business in Hong Kong, but it is unlikely to spark a mass exodus of foreign firms.

Hong Kong stocks rallied almost 3 per cent on Thursday, led by property firms with investors betting that the law will restore stability to the city.

"By and large, the mindset of business people is always to try and carry on as if nothing has changed, and try and avoid the political risks," said Ben Bland, a political analyst at the Lowy Institute, an Australian think-tank.

The city's American Chamber of Commerce said it would take time for local business to "digest details of the law".

"We hope it will not impact the dynamism and benefits of this great city," the chamber said.

But Hong Kong's status as a gateway to the riches of mainland China - the world's second-largest economy - is likely to remain the top consideration for investors, analysts said.

The city's equity and property markets have been flooded with mainland billions in recent years.

By the end of 2019, mainland companies made up 73 per cent, or US$3.4 trillion, of the market capitalisation in Hong Kong, said the Hong Kong Trade Development Council.

Some of China's biggest state-owned and private companies are listed in the city.

Most recently, Chinese e-commerce giant JD.com raised almost US$4 billion last month in what was the world's second-biggest initial public offering this year.

"I do feel this will add to the complexity of working in Hong Kong or operating out of Hong Kong," Jun Bei Liu of Tribeca Investment Partners told Bloomberg.

"But I think Hong Kong is still very, very relevant and it is the hub to have access to China, which is an enormous market." BLOOMBERG