A new American Chamber of Commerce in Singapore (AmCham) survey, conducted in collaboration with market researcher Ipsos, provides a clear indication yet of how business sentiment and investment decisions are being impacted by Hong Kong’s three-month-old political crisis.
• 80% of respondents said that Hong Kong’s ongoing turmoil, which has lasted almost 4-months has affected their investment decisions and that Singapore is the top relocation destination
• 67% of Chief Executive Officers, directors and senior managers from company respondents said that Hong Kong’s reputation as a regional base of operations for businesses has been tarnished
• 80% of respondents indicated that Hong Kong’s ongoing turmoil and negative image have affected their future decisions to invest in the city.
• More than 20% of respondents said they were considering whether to move capital or relocate business functions out of Hong Kong, though more than 70% of respondents said they had no such plans.
• 91% of the respondents who said that they were considering whether their companies should relocate said that their preferred destination would be Singapore
• A majority of respondents believe that Singapore will benefit economically from Hong Kong’s protracted instability. Perceptions that Singapore will benefit were higher among companies planning or considering moving operations from Hong Kong (86%) compared with those not planning a move (64%).
Tan Hui Ching, Public Affairs Director for Ipsos said in a briefing that the survey was conducted online between August 21 to 29 and its results reflect current business sentiments. Though protests over the past 14 weeks have dented Hong Kong’s reputation, the impact of those sentiments would not necessarily be long-term, she estimated.
Damien Ryan, Chief Executive Officer, Asia-Pacific for Teneo Strategy, said: “Has sentiment been impacted? Absolutely. No doubt about that. Are businesses reviewing plans and making those decisions to relocate? I think that’s a little bit early at the moment, simply because they’re in the middle of what is a fairly significant crisis that they’re trying to address.”
Companies in Hong Kong have maintained business as usual and agree that Hong Kong still remains safe and that protest activity has been relatively calm during weekdays. AmCham Singapore members have been advised to fly and in out of Hong Kong between Monday and Thursday in order to avoid airline disruption.
Anupama Puranik, Managing Director of Russell Reynolds Associates, said that companies with operations in Hong Kong will be reluctant to walk away and “throw the baby out with the bathwater” given that the city is still a gateway to China.
Hong Kong remains the top location for offshore and onshore renminbi trading and settlements, with 75% of all offshore payment flows of the currency pass through the territory, while nearly a quarter of all foreign exchange transactions in renminbi are made there. Singapore, by contrast, processes 3.5% of international renminbi-denominated transactions.
Allison Cheung, Tax Partner at PwC Singapore, believes that the turbulence in Hong Kong is a phase that will eventually pass. Cheung said, “I think that the outlook is not very optimistic, gut I think essentially it will come to an end, whether it’s a compromised position or whether it could be a potentially disastrous ending.”