Deep in recession, Hong Kong eyes comeback with rugby, bank meet

Hong Kong, China – Simon Friend, 35, was working from home in Amsterdam last month when he heard murmurings that Hong Kong would finally reopen to the world.

Friend, a devotee of the Hong Kong Rugby Sevens, the city’s biggest sporting event, could hardly wait to book a flight.

The tournament, which is being held from November 4-6, is taking place for the first time in two years after Hong Kong lifted some of the world’s strictest COVID-19 curbs, including compulsory hotel quarantine for arrivals.

“This will be my 25th Hong Kong Rugby Sevens, it’s safe to say I’m a big fan,” Friend told Al Jazeera.

“It’s coming up to two years since I’ve seen friends and family there. No hotel quarantine plus being able to attend the Sevens was a no-brainer for me. A win-win.”

“The Sevens is hands down the best party of the year in Hong Kong, every year,” he added. “It’s the best reason to have a few drinks and to get dressed up in fancy dress and party.”

The Hong Kong Rugby Sevens drew tens of thousands of visitors from all over the world before the pandemic hit [File: Tyrone Siu/Reuters]

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

Still, visitors to the city will have to endure restrictions long ago abandoned elsewhere, including multiple COVID tests, mask mandates and a three-day monitoring period during which venues such as restaurants and bars are off limits.

Those that do come will find a city in recession, its economy battered by the twin shocks of harsh pandemic curbs and a sweeping 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 severe 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 the operations of businesses in the city, setting in motion a record exodus of skilled professionals from the city.

Financial firms like Citigroup have relocated some key staff and functions out of Hong Kong, while United States fashion giant VF Corp and French IT services firm Capgemini moved their regional head offices to Singapore.

‘Devastating’

Established in 1976, the Hong Kong Rugby Sevens was by far the city’s biggest money-spinning sporting event before the pandemic, drawing tens of thousands of visitors from all over the world.

For the Hong Kong Rugby Union, which relies on the 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.

“With no tournament since 2019 we have accumulated over $250 million Hong Kong dollars [$31.8m] of losses which has led to half our staff losing their jobs.”

McRobbie said the competition is an important signal that the city is “bouncing back” and open for business.

“Normally we only sell 20,000 tickets locally, but we’ve already sold about 26,000, so we are already ahead of that — we’re happy with domestic demand, and very appreciative of the continued support of the local community,” he said.

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

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

Allan Zeman, a property tycoon known as the godfather of the Lan Kwai Fong party district, said that the ending of quarantine, while “a breath of fresh air,” was not enough to bring back visitors 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 prohibits them from venues such as restaurants and bars.

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

“Nobody wanted to take a chance to upset [Beijing] that week,” said Zeman.

“I think the government here decided that it was not the appropriate time to go for ‘0+0’, that ‘0+3’ was already as much as they can push it for now.”

Skyline view of Hong Kong banks.
Hong Kong’s government hopes its banking summit taking place November 1-3 will signal the financial hub is open for business [File: Bobby Yip/Reuters]

Banking executives and other financial leaders attending the Global Financial Leaders’ Investment Summit, the banking summit taking place November 1-3, will have a reprieve from the restrictions facing other travellers.

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

With the exception of JPMorgan Chase Chief Executive Jamie Dimon, who was controversially given an exemption from the city’s quarantine rules at the height of the pandemic, the summit will mark the first time some of the biggest names on Wall Street touch down in the financial hub since the pandemic began.

Zeman, who will be attending the summit, said the event is a “vote of confidence for Hong Kong”.

“These institutions,” Zeman said, “have always regarded Hong Kong as their head offices for Asia.”

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

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

Others are less optimistic.

Martin Young, a professor at Massey University in New Zealand who chairs the Asian Shadow Financial Regulatory Committee, said Hong Kong’s partial reopening 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. “Scrapping all COVID pandemic measures will definitely have a positive impact on domestic consumption and visitor spending but it is only part of the problem that Hong Kong faces.”

With economic woes deepening and calls for an end to all restrictions growing louder, Hong Kong Chief Executive John Lee has rolled out measures to attract talent and investment, including a 30-billion Hong Kong dollar ($3.8-bn) fund to support business in the city.

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

Gary Ng, a senior economist at Natixis, said that 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 deficit, the Hong Kong government probably cannot afford more spending and will have fewer resources to deploy for long-term problems if growth does not rebound.”

Investor confidence in the city’s ability to navigate the crisis has waned. Reports about China’s slowing economy and delayed economic data last week sent the Hang Seng Index tumbling to 15180 — its lowest since the 2009 financial crisis.

Ng said the government bore the blame for “80 percent of the recession risk it is facing”.

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

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

“Could Hong Kong have handled COVID better? It is much easier to determine best practice in hindsight but if there was a place that one might say did best, I would give that to Singapore,” Young said.

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

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