Deep in recession, Hong Kong seeks a comeback with rugby and bank meet

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Hong Kong, China- Simon Friend, 35, was working from home in Amsterdam last month when he heard rumors that Hong Kong was finally reopening to the world.

Friend, a devotee of the Hong Kong Rugby Sevens, the city’s biggest sporting event, couldn’t wait to book a flight.

The tournament, which will take place from November 4-6, takes place for the first time in two years after Hong Kong lifted some of the world’s strictest COVID-19 restrictions, including a mandatory quarantine in hotels for arrivals.

“This will be my 25th Hong Kong Rugby Sevens, I can say I am a huge fan,” Friend told Al Jazeera.

“I haven’t seen friends and family there in two years. No hotel quarantine on top of being able to attend Sevens was a no-brainer for me. A win-win.”

“The Sevens is without a doubt the best party of the year in Hong Kong, every year,” he added. “It’s the best reason to have a few drinks and dress up and party.”

The Hong Kong Rugby Sevens attracted tens of thousands of visitors from around the world before the pandemic hit. [File: Tyrone Siu/Reuters]

Hong Kong’s government hopes the sporting event, along with a high-profile international banking summit that began Tuesday, will be a sign the city is open for business amid fears over its status as an international financial hub.

Still, visitors to the city will have to endure long-abandoned restrictions elsewhere, including multiple COVID tests, mask mandates and a three-day monitoring period during which places like restaurants and bars are banned.

Those who come will find a city in recession, its economy battered by the twin shocks of harsh pandemic restrictions and a broad Beijing-led crackdown on dissent.

Hong Kong’s retail and tourism sectors were already reeling from the 2019 pro-democracy protests when the government’s harsh response to COVID-19 plunged the city into its second recession in three years.

Hong Kong’s “dynamic zero covid” policies, including hotel quarantine, severely disrupted business operations in the city, setting in motion a record exodus of skilled professionals from the city.

Financial firms such as Citigroup have moved some key staff and functions out of Hong Kong, while US fashion giant VF Corp and French IT services firm Capgemini have moved their regional headquarters to Singapore.

‘Devastating’

Established in 1976, the Hong Kong Rugby Sevens was by far the city’s most profitable sporting event before the pandemic, drawing tens of thousands of visitors from around the world.

For the Hong Kong Rugby Union, which relies on Sevens for 95 per cent of its annual revenue, the return of the tournament is seen as nothing less than a matter of survival.

“The last three years have been devastating for the Union and the rugby community,” Robbie McRobbie, CEO of the Hong Kong Rugby Union, told Al Jazeera.

“Without a tournament since 2019, we have amassed over $250 million Hong Kong dollars. [$31.8m] loss that has led to half of our staff losing their jobs.”

McRobbie said the competition is an important sign that the city is “getting back on its feet” and is open for business.

“Normally we only sell 20,000 tickets locally, but we’ve already sold about 26,000, so we’re already ahead of the game. We are pleased with the internal demand and very grateful for the continued support of the local community,” he said.

Still, McRobbie said restrictions, including mask-wearing and testing requirements at the event itself, would keep out international visitors, who typically make up about half of the 40,000 spectators.

“Our fans like to enjoy Hong Kong’s nightlife when they come to the city,” he said.

Allan Zeman, a property tycoon known as the godfather of the Lan Kwai Fong party district, said the end of the lockdown, while “a breath of fresh air,” was not enough to bring visitors back to Hong Kong.

“Tourists are definitely the last piece of the puzzle for Hong Kong, but they won’t come back in numbers under the ‘0+3’ restrictions,” Zeman told Al Jazeera, referring to the three-day monitoring period for arrivals that it bars from places. like restaurants and bars.

Zeman, who is also a government adviser, believes Hong Kong leader John Lee probably erred on the conservative side because of the recent Communist Party Congress in China.

“No one wanted to risk disturbing [Beijing] that week,” Zeman said.

“I think the government here decided it wasn’t the right time to go for ‘0+0,’ that ‘0+3’ was all they could push for now.”

Skyline view of Hong Kong banks.
The Hong Kong government hopes its banking summit from November 1-3 will be a sign that the financial center is open for business. [File: Bobby Yip/Reuters]

Bank executives and other financial leaders attending the Global Finance Leaders Investment Summit, the banking summit taking place November 1-3, will get a reprieve from the restrictions other travelers face.

In a statement, the Hong Kong Monetary Authority (HKMA), host of the Global Financial Leaders Investment Summit, said government-approved “infection control agreements” would be put in place to provide the “necessary facilitation” for participants participate in the summit and carry out business activities. HKMA has emphasized the importance of the event being in person to allow guests to meet staff and clients and build relationships.

With the exception of JPMorgan Chase Chief Executive Jamie Dimon, who was controversially granted a waiver from the city’s quarantine rules at the height of the pandemic, the summit will mark the first time that some of the biggest names of Wall Street land in the financial center. since the pandemic started.

Zeman, who will attend the summit, called the event a “vote of confidence for Hong Kong.”

“These institutions,” Zeman said, “have always regarded Hong Kong as their Asian headquarters.”

Zeman said Hong Kong’s position as a gateway between East and West makes it an ideal venue for such an event.

“China is too big and important a market for any bank in the world to turn its back on,” he said.

Others are less optimistic.

Martin Young, a professor at New Zealand’s Massey University who chairs the Asian Shadow Financial Regulatory Committee, said a partial reopening of Hong Kong will not be enough to revive the economy this year.

“It is important for [Hong Kong] to open up as quickly as possible,” Young told Al Jazeera. “Removing all measures against the COVID pandemic will definitely have a positive impact on domestic consumption and visitor spending, but it is only part of the problem Hong Kong is facing.”

With economic woes deepening and calls for an end to all restrictions growing louder, Hong Kong Chief Executive John Lee put in place measures to attract talent and investment, including a $30 billion fund from Hong Kong ($3.8 billion) to support businesses in the city.

Hong Kong Chief Executive John Lee waves as he enters the Hong Kong Legislative Council chamber.
Hong Kong Chief Executive John Lee has implemented a series of measures to attract talent and investment to the city. [File: Vernon Yuen/AP]

Gary Ng, senior economist at Natixis, said such announcements, while welcome, are stopgap measures.

“It will be less costly for the government and society with a fully reopened business environment,” Ng told Al Jazeera.

“With another year of fiscal deficits, the Hong Kong government probably can’t afford more spending and will have fewer resources to deploy on long-term problems if growth doesn’t pick up.”

Investor confidence in the city’s ability to weather the crisis has vanished. Reports of China’s slowing economy and delayed economic data last week sent the Hang Seng Index falling to 15180, its lowest level since the 2009 financial crisis.

Ng said the government was to blame for “80 percent of the recession risk it faces.”

“While the government cannot control politics in mainland China, it has room to adjust its approach by removing all COVID-related restrictions.”

Young said the city should fully transition to living with the virus like the rest of the world, including rival Singapore, which last month took Hong Kong’s place as Asia’s top financial center in the 2022 Global Financial Index.

“Hong Kong could have handled COVID better? It is much easier to determine best practices in hindsight, but if there was one place that could be said to have worked better, I would give it to Singapore,” Young said.

“In my opinion, now is the right time for Hong Kong to follow Singapore’s example in dealing with COVID.”

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