Letter from... Hong Kong

By Fergus Herries, Senior Consultant at Newgate Asia

Since the last time we wrote, a mood of uneasy calm has settled over Hong Kong, bolstered by four days of blue skies over the Easter weekend. Initial fears of a “second wave” of infections on the catastrophic levels seen in New York or London have so far failed to materialise; the current total number of cases stands at just over 1,000 and new cases are in the single digits. The vast majority of those which have been recorded are now imported from abroad, and being held either in quarantine centres, or under strict quarantine at home.

While retail and hospitality has ground to a halt in line with the rest of the world, corporate activity continues unabated. Several firms from Hong Kong and China have recently announced ambitious fundraises, the roadshows for which were either completed just before global lockdowns went into place, or during it in some cases. This news has been cheered by commentators as signs of resilience and recovery in capital markets. There is a feeling that a wave of pent up demand is about to be unleashed, if the numbers at their current rates can continue and even drop.

In China, various cities are lifting the draconian lockdowns which have been in place, in some cases, since January. The city of Wuhan, at the epicentre of the beginning of the outbreak, has finally seen most of its restrictions lifted. On the day this happened more than 50,000 people swamped the main train station.

In Shanghai, businesses are up to nearly 80% of their previous levels, according to anecdotal reports, and life is almost as it was before. In Beijing, local authorities are being more cautious, but measures are being steadily relaxed. Business is recovering quickly for both local and foreign firms – Apple announced that its production lines were already largely back to its pre-coronavirus levels. As companies begin to return to normal daily operations, thinking about the future, offering accurate insights into market conditions and establishing what the “new normal” operating conditions are, is increasingly important for businesses in China and Hong Kong.