Hong Kong’s independence is threatened by China and that will affect international finance and investors.
Tensions have increased between Mainland China and Hong Kong. U. S. reaction to tighter control by Beijing over the island that happens to be a global financial hub has been negative, spurring in turn harsh rhetoric from China’s government.
In other words, geopolitical heat is on just in time for Summer.
But as the relationship between China and the island region deteriorate—which likely will mean difficult times ahead and a lot of financial uncertainty—investors have an interesting opportunity, if they want to invest in Chinese companies.
«The Chinese moves recently in the South China Sea and now in Hong Kong are very aggressive on the world stage,» said Chris Campbell, chief strategist for Duff & Phelps and a former Assistant Secretary of the U. S. Treasury for Financial Institutions in the Trump administration, said in an interview. «It’s unusual for China. Typically, they’re much more measured.»
The result has a good chance of increasing the animosity between China and the U. S. as it could become a good political tool in the upcoming elections.
«I think it will be very popular to be against China,» Campbell said. «Talking to my friends on both sides [of both major U. S. political parties], I suspect part of their campaign strategy will paint the other one as ‘soft’ on China.»
Putting aside the moral and ethical stance (and sincerity) of any such positions, there will be significant implications. And economic ramifications.
«China will interpret any criticism of Beijing’s dealings with Hong Kong [as well as] the Uighur minority as an unacceptable interference in their internal business,» wrote Bert Brenner, the director of investment and economic research at People’s United Advisors, in an emailed response on the situation.
«Rising tensions with China will only further accelerate the rate of economic change we are already experiencing largely due to the coronavirus pandemic,» Brenner added.
