Hong Kong has to endure a “financial crisis-like” impact

The Hong Kong stock market has been depressed recently and consumption has been weak, but there will be a glimmer of hope in the future, mainly because the U.S. economy is showing signs of peaking and the market expects that the U.S. Federal Reserve’s interest rate cut cycle will come soon.

Recently, the consumer spending released by the United States finally showed signs of weakening. Starting from the fourth quarter, personal spending in the United States included non-essential expenditures such as cars, furniture, and gym membership cards. The holiday shopping atmosphere is also not that high, with some of the largest chain stores in the United States facing a decline in spending during Black Friday. The slowdown in spending was welcomed by Fed officials. They have been worried that strong consumption may lead to high inflation, causing the U.S. Federal Reserve to raise interest rates again. However, the slowdown in personal spending in the United States shows that U.S. interest rate hikes may have peaked.

The trading data of U.S. interest rate futures reflects the market’s estimate of the future direction of interest rates. The trading volume of interest rate futures shows that the U.S. interest rate cut in 2024 is currently expected to be 1.25%, which is almost twice the rate of interest rate cut reflected in the market data in mid-October. . Trading data shows that the market expects that the fastest interest rate cut will be in March next year, which is earlier than originally expected to start in the third or fourth year of next year. The Federal Reserve normally raises and lowers interest rates by 0.25% each time. The expected rate cut of 1.25% means that the market expects the Fed to cut interest rates five times next year.

Many people attribute the poor performance of the economy and stock market to local or mainland economic factors. Although these factors are all related, the most important factor affecting Hong Kong’s economy is the direction of U.S. interest rates. Because the Hong Kong dollar and the U.S. dollar have a linked exchange rate, the fluctuation range of the Hong Kong dollar is limited. The United States will violently raise interest rates by more than 5% starting from 2022, causing the U.S. dollar to strengthen significantly. Other currencies that are freely convertible with the U.S. dollar will correspondingly weaken significantly. They will have another crisis, that is, a sharp decline in currency value will lead to massive inflation. rise, the economic pressure will be greater. It seems that Sri Lanka, Turkey and Argentina are facing this situation.

Hong Kong has another kind of pressure. The linked exchange rate protects the Hong Kong dollar exchange rate from falling. However, the Hong Kong dollar has become quite expensive following the rise of the US dollar, triggering an outflow of capital and even consumption. Hong Kong people have recently traveled overseas in large numbers and even traveled north to spend money. They feel that they are from other places. Consumption is very cheap, and the main reason is the decline in exchange rates elsewhere. In terms of currency value alone, the benefits of going north for consumption are obvious.

In fact, the sharp rise in the exchange rate of the US dollar is often the origin of financial crises in emerging markets. In the mid-1990s, Democratic President Clinton of the United States came to power, implemented a balanced budget, and significantly reduced the deficit. The exchange rate of the U.S. dollar rose sharply. The U.S. dollar index, which reflected the U.S. dollar against six major currencies, rose from a low of 81 in June 1995 to The high of 101 in August 1998 increased by 24.6% in three years, which triggered the Asian financial crisis.

Looking back this time, the U.S. dollar index rose sharply from a low of 90 in May 2021 to a high of 112 in September this year, which was also an increase of 24.4%. The increase was close to the increase in the 1990s, but the time was shorter. It just took Two years. Although the U.S. dollar exchange rate has fallen recently due to market expectations that the U.S. will cut interest rates, and the U.S. dollar index fell to the level of 104, it is still 15.6% higher than the low two years ago. The Hong Kong dollar follows the US dollar, which means that the Hong Kong dollar is now more than 15% more expensive than other major currencies, which puts great pressure on Hong Kong. This is first reflected in the investment market.

The fall of the stock market is affected by two major factors. The first is the sharp rise in interest rates. When Hong Kong people move their deposits from one bank to another, all new funds have interest rates of more than 4% to 5%. How many people have interest rates? Interested in buying stocks? The second is the sharp rise in borrowing costs. Whether it is buying stocks on margin or borrowing money to buy property, it has caused an extremely heavy burden.

If measured in terms of the increase in the US dollar, what Hong Kong is facing this time is basically equivalent to the huge pressure that occurred during the financial turmoil in 1997 and 1998. Although Hong Kong’s property market has fallen, it is still relatively stable. Although the stock market has hit a low, it has not experienced a sharp decline. Collapse is a blessing. Now we can only suffer silently until the United States cuts interest rates and the Hong Kong investment market has a way to survive.

Lu Yongxiong

Former Hong Kong Demosisto member Chow Ting jumped bail and fled to Canada. He also announced on social media IG that he would never return to Hong Kong in a high-profile manner, which caused a lot of discussion. Originally, an exile could abandon bail and abscond quietly without making any announcement, but Zhou Ting chose to make a high-profile announcement. It is generally analyzed that she wanted to cover up the planned behavior of abandoning bail, package herself as a hero, gain political aura, and rationalize. If you act on your own, you will of course sacrifice your “brothers and sisters” in Hong Kong, regardless of it.

It seems that things are not that simple, mainly because of the timing of her release. This Sunday (December 10) is the day of the district council election. Zhou Ting announced at this time that he will never return to Hong Kong, which has the flavor of stimulating anti-government sentiment in society. This is used to awaken the memories of citizens who support the opposition, and has the potential to boycott the district. The role of parliamentary elections makes me think that propaganda to boycott district elections has begun to appear online recently.

One of the cases was that the Independent Commission Against Corruption on Tuesday charged 38-year-old computer programmer Wen Rongfeng for reposting a post on his personal online social media page that incited others to boycott the district council election. The poster and commentator Huang Shize has moved overseas and is also wanted by the ICAC.

The other order is an online call for people to vote by “tick twice.” Recently, someone spread the news on the Internet that during the District Council direct election voting, you can choose two candidates by selecting two candidates. Since only one candidate should be selected in a direct election, this kind of behavior of teaching people to select two candidates is actually to make the ballots invalid. It is an act of inciting others to invalidate the election, and may violate Article 1 of the Election Ordinance. Section 27A, which is the crime of “using public activities to incite another person not to vote or to cast an invalid vote during an election period”, is punishable upon conviction with a maximum sentence of three years’ imprisonment and a fine of $200,000.

I did a small survey and asked 10 ordinary citizens. 5 or 6 of them didn’t know whether to choose one or two constituency members.

After improving district administrative changes and district council elections, there are three ways to select the next district council. The first is appointed and ex-officio members, and the second is the election of members of the three committees (i.e. District Crime Fighting Committee, District Fire Prevention Committee and members of the zoning committee), and the third is direct election by zoning.

Taking district direct elections where the majority of the public can vote as an example, there are 44 constituencies after redrawing, and each district has two seats, which means that 88 district councilors can be elected through direct district elections. The constituencies after redrawing are larger than before, so the name of the constituency and even the polling station may be changed, and the election method adopts the “double-seat single-vote system”. In other words, although a district has two seats, voters can only To vote, use your voting stamp to check one candidate. You cannot just check two candidates just because there are 3 or 4 candidates. If two ticks are taken while voting, the ballot will be invalid and become a spoiled vote. Therefore, asking people to tick two boxes is indeed an intentional incitement to cast spoiled votes and undermine the election.

The conclusion is that four years have passed since 2019, and the society is calm on the surface, but there are still undercurrents underneath. Whether it is Zhou Ting’s high-profile abandonment of bail and absconding, calling people to boycott online, or asking people to double-check when voting, they are all inciting and destroying public sentiment. election suspicion. So from another perspective, people who support Hong Kong’s return to calm and want Hong Kong to be stable and prosperous should not think that the world is peaceful. Seeing so many people making trouble, they should come out to vote this Sunday (December 10). Remember To vote by residential district, you only need to tick a box and choose a candidate.

Lu Yongxiong