By Nisha Gopalan
(Bloomberg Opinion) -- After 10 weeks of silence, Hong Kong’s business elite have started voicing opposition to the city’s increasingly violent protests. The cracking in the facade of neutrality comes amid mounting damage to the Hong Kong economy and pressure from Beijing for public displays of loyalty. Being forced to take sides is unlikely to end happily for them.
On Monday, property billionaire Peter Woo called on protesters to quit and wrote that some people were aiming to “purposely stir up trouble.” A day later, Sun Hung Kai Properties Ltd., the city’s biggest developer by market value, issued a statement condemning violent protests. Former Wheelock & Co. Chairman Woo, Sun Hung Kai Chairman Raymond Kwok and his brother Thomas Kwok are among Hong Kong’s 10 richest people, each worth more than $10 billion.
The reticence of Hong Kong’s tycoons has been understandable. In normal circumstances, business can be expected to range on the side of the establishment and the forces of law and order. However, overwhelming public support for the protests triggered by a proposed extradition bill has forced them to consider the consequences of potentially alienating employees and customers in the city. Moreover, the business community itself expressed severe misgivings over a law that would have allowed people accused of a crime in China to be sent for trial in the mainland’s politically controlled legal system. Indeed, opposition from companies was an obvious factor in the government’s decision to suspend the bill, as we wrote in June.
Threading that needle has now become close to impossible. As the weeks have stretched on and the protests have intensified, China’s central government has become increasingly alarmed. The State Council’s Hong Kong and Macau Affairs Office has staged three press conferences in the past month, having held none in the first 22 years after the former British colony returned to China.
Beijing is now demanding order. On Aug. 7, the office called on Hong Kong’s elite to “have no fears and stand up” to protesters, urging them to safeguard the city’s stability and demonstrate “positive energy.” The following day, 17 real estate companies including Sun Hung Kai and Li Ka-shing’s CK Asset Holdings Ltd. released a statement saying Hong Kong had been suffering from “violence perpetrated by a small group of individuals” whose actions had “deviated from the original intent of the peaceful demonstrations and are bringing distress to the business community and the general public as a whole.”
Woo is the most prominent businessman to have spoken out against the protests in his own name. With more than $7 billion of his wealth in Wheelock stock, he may be in a more precarious position than most. Subsidiary Wharf Real Estate Investment Co. put up signs at its Harbour City mall this month asking police not to enter unless a crime had been committed, after anti-government protesters threatened to disrupt business at the complex, the South China Morning Post reported. Harbour City and Wharf REIC’s Times Square between them account for 10% of Hong Kong’s retail sales, according to Bloomberg Intelligence analyst Patrick Wong.
The company put up the signs after clashes between police and demonstrators last month at a shopping center in the suburban town of Sha Tin that prompted criticism of owner Sun Hung Kai. In that case, the developer denied protesters’ allegations that it invited police to enter the mall.
Placating protesters comes with the risk of enraging China, though. For evidence of the costs of being insufficiently supportive, look no further than Cathay Pacific Airways Ltd. Last Friday, China’s civil aviation authority issued a warning to the airline for failing to take appropriate action against employees who took part in illegal protests and demanded a raft of changes, ordering the carrier to suspend all such staff from duty on flights to the mainland.
That was just the start. At least two Chinese state-run companies told their employees not to fly on Cathay, and the investment-banking arm of the nation’s biggest lender cut the company’s stock to a “strong sell,” citing damage to its brand from the Hong Kong protests. Cathay shares fell to a 10-year low this week. On Tuesday, Cathay’s parent company Swire Pacific Ltd., said it “resolutely” supports the Hong Kong government and police in restoring law and order. The statement followed a visit by Chairman Merlin Swire to meet with China’s aviation regulators in Beijing on Monday.
Expect more such declarations. Like Swire, which has bottling and property operations in China, Hong Kong’s real estate tycoons have major mainland businesses to protect. Wheelock, for example, gets about 38% of its revenue from the mainland.
But beware the backlash at home. Hong Kong’s property billionaires hold huge sway over the economy, in a city where inequality has been exacerbated by the world’s least affordable home prices. If seen to be lining up behind forces that aim to perpetuate that system and reject all protesters’ demands – which include greater democracy – they may themselves become tempting targets for popular ire. It’s a no-win situation.
© 2019 Bloomberg L.P.