Charles Li, the CEO of Hong Kong Exchanges and Clearing Ltd (HKEX), has issued a warning about the economic damage caused by the ongoing anti-government protests in Hong Kong. He believes that the full extent of this damage will soon become evident, particularly for local companies exposed to the local market. In fact, these companies are already experiencing the impact on their performance. HKEX itself reported an 8% decrease in profit for the third quarter, the sharpest drop in nearly three years. This decline can be attributed to the negative investor sentiment influenced by the protests.

The retail and tourism sectors in Hong Kong are expected to be the most affected by these disruptions caused by the protests. As a result, considerable negative results are anticipated from the companies operating in these sectors. What initially began as demonstrations against an extradition bill has now grown into a broader pro-democracy movement, demanding universal suffrage and an independent inquiry into police conduct. Many residents of Hong Kong believe that Beijing’s influence over the city is expanding at the expense of its autonomy. However, Beijing denies any interference and places blame on foreign powers for inciting the protests.

Despite these challenging circumstances, HKEX is expected to receive a boost in its full-year earnings due to a surge in share sales during the fourth quarter. One notable contribution to these earnings is Alibaba Group Holding Ltd’s secondary listing in Hong Kong, which raised nearly $13 billion. Even amidst the protests, HKEX remains confident about its future prospects.

In a surprising move, HKEX made a $39 billion bid for the London Stock Exchange Group in September. However, after failing to gain support from LSE management and investors, the offer was later withdrawn. Charles Li has mentioned that the company is still open to potential acquisitions, emphasizing that all options are still on the table.

With the economic consequences of the anti-government protests becoming increasingly evident, it is clear that the situation in Hong Kong will have far-reaching effects. The disruptions caused by the demonstrations will continue to impact local businesses, making it crucial for companies to navigate this challenging environment. However, the surge in share sales and the potential for future acquisitions offer some optimism for HKEX and the Hong Kong business landscape.

Useful links:
Mapped: How Hong Kong protests have eroded business districts
Hong Kong Exchanges’ $39 billion bid for the London Stock Exchange