Letter from... Hong Kong

By Fergus Herries, Senior Consultant, Newgate Asia

The past week has seen a resurgence of Covid-19 cases in Hong Kong, which is being billed as the city’s “third wave”. Hong Kong for weeks now has almost completely relaxed most social distancing measures – public pools and gyms have been open, as well as bars and restaurants, while public gatherings of 50 people have also been allowed. This latest spike, which the medical authorities are struggling to find a source for, has led to a swift resumption of most social distancing measures, bars and restaurants are shut again and wearing a mask is now mandatory on public transport; as I write this, the office is almost empty, with working from home now optional again to the team.

The difference this time around is that all of the measures have only been put in place for a week at first, although with cases still rising, this is likely to be extended. Talk about “travel bubbles” and “air bridges” to countries such as Taiwan, Vietnam and Thailand, or to the mainland and Macau have all been temporarily shelved. Hong Kong remains shut off from the outside world for tourism and business travel, with quarantine measures for all visitors in place since February. This is expected to be lifted in mid-September, but with the government’s cautious approach to combatting the virus, most people expect this to be extended, potentially to the end of the year.

Businesses have been operating as usual for the past few months, and hot money is driving the Hang Seng as well as a stream of blockbuster IPOs. The effect of the new Security Law, which came into force at the beginning of the month, on the business community in Hong Kong remains to be seen at this point. At Newgate, we are seeing more RFPs coming through as businesses realise that the current business environment is likely to last for the foreseeable future. There is also a feeling that businesses in Asia have a head start at the moment, or at least a first look at the longer-term impacts as the region is largely returning to normal.