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Thursday, October 10, 2019, 16:49
Outside the box
By Peter Liang
Thursday, October 10, 2019, 16:49 By Peter Liang

International credit rating firm, S&P Global Ratings said that the prolonged civil unrest in Hong Kong is posing new and unforeseen risks to even the best run local corporations which have to negotiate “unfamiliar territories” of “complex sensitivities.”

Especially hard hit by violent protests has been the Mass Transit Railway which has its reputation of operating one of the world’s most efficient transport systems tarnished in the commotion. The company, which was once the pride of Hong Kong people, has been subject to wanton attacks by anti-government protesters who have repeatedly vandalized facilities in numerous stations, causing disruptions of services to the great inconvenience to the public.

The cost of the service disruptions and repair has yet to be ascertained. But the company’s stocks have taken a beating amid growing investors’ concern that there is no sight to the end of the protests.

Other than the MTR, there are many other businesses, especially those in tourism and retail, have taken either a direct or indirect hit from the civil unrest. The loss of business among the large department stores, such as Sogo in Causeway Bay, and the many name brand outlets is well documented. 

Closures or downsizing of many retailers have forced landlords of retail spaces and shopping malls to cut rents to retain tenants. Falling rental rates could make a dent on the incomes of property companies, including Swire and Sun Hung Kai, which owns and manage some of the largest malls in the busy tourism and commercial districts.

Indeed, the prospects of the property developers have already been clouded by the falling demand of homes in both the primary and secondary markets in recent months as prospective home buyers who believe that this is not the best time to have all their savings tied up in immovable assets.

Even banks are being talked down by analysts of large international investment firms, which have downgraded HSBC and its subsidiary Hang Seng Bank in their latest reports.

In times like these, it takes investors with nerve of steel to hunt for bargains among Hong Kong stocks. 

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