Protests persist in Hong Kong following Carrie Lam’s failure to formally withdraw the extradition bill, leading to political and social uncertainty for the future of the city. Citizens are looking for a “plan B” in cities like London, especially whilst the pound is currently weakened by Brexit uncertainty, where they can migrate to in order to avoid what may end up as a complete deterioration of Hong Kong’s freedom and legal system as it is now.
Hongkonger Contingency Plan
Ongoing demonstrations and anger towards the extradition law and crumbling of Hong Kong’s freedoms are causing Hongkongers to rethink a long-term future in the city and make plans for migration.
A secondary school teacher speaking to South China Morning Post said, “Given that the environment in Hong Kong is not very promising … we want to have another choice if things go very bad here.”
Those not wanting to witness Hong Kong’s diminishing freedom are considering their options elsewhere, with the UK being a top candidate amongst Canada, the US, Singapore and Malaysia. Hongkongers who have previously considered emigrating are seizing the opportunity before the political situation worsens and begins to affect everyday lives, and whilst the pound sterling is at a weak point in the UK, investors are taking advantage of this critical time to form a contingency plan. There has also been talk of the British government granting citizenship rights to Hongkongers, illustrating the desire for Britain to help its former colony without intervention.
Since June, Hong Kong has seen its citizens stand up against an extradition law that would potentially see criminal suspects in Hong Kong extradited to China, which many protesters believes undermines Hong Kong’s legal freedom and marks the beginning of the loss of all other Hong Kong freedoms. The Hong Kong police began using teargas and rubber bullets, sparking anger in peaceful protesters and triggering some of the worst violence Hong Kong has seen in decades. Despite Carrie Lam’s announcement that the law was “dead”, protesters were not satisfied with the lack of formal withdrawal and the demonstrations across Hong Kong persist.
Gillem Tulloch, founder of GMT Research, became one of the first Hong Kong finance professionals to say that he might relocate to Singapore or the UK due to concerns that his firm’s often-critical research reports into mainland Chinese companies make its staff vulnerable to false allegations in China that could be used as a pretext for extradition.
With the risk of a gradual deterioration in the political and social freedoms of the Hong Kong, the UK and London in particular offer a dependable legal and education system whilst also having historical and cultural ties to Hong Kong.
The Weak Pound and Johnson’s EU Rejection
In July, the sterling dropped to its lowest point against the dollar in two and a half years following the new prime minister’s talk of a no-deal Brexit. In recent news, Johnson was confident that EU leaders would change their position on the Northern Ireland backstop in the withdrawal agreement, yet his confidence was shown to be futile as the European Union rejected his request to remove the backstop, and the possibility of a no-deal Brexit is seemingly ever more of an inevitability.
The Independent have said “the pound is set to fall even further as the likelihood increases of a no-deal Brexit”, meaning investors are seizing opportunities in the UK while prices are low.
On Tuesday, Angela Merkel made comments on finding a solution to the backstop problem, which triggered a sharp rise in the pound. Boris Johnson will talk about his new plans in Berlin and Paris this week, which could prove to be important for the sterling if Angela Merkel and Emmanuel Macron are open to his suggestions.
The prime minister insists that Britain will be leaving the European Union on the 31st of October, with or without a deal, and until then, it is unlikely that the pound will fully recover but may experience the effect of reactions to headlines as decisions are being contemplated.
During the current trade war between the US and China, investors are seeing this opportunity with the weak pound and tech firms in particular are flooding into the UK whilst prices are low and investments can grow in the long term.
“In total, Asia invested $1.8bn into the UK tech sector in the first half of this year, compared to $0.6bn the year before,” says BBC News, demonstrating the confidence investors are placing in the UK, triggering a domino effect for other investors.
Some investors are worried about what impact Brexit will have on the UK’s tech talent pool if EU nationals aren’t able to work in the UK in the event of a no deal Brexit, however with the possibility of Hongkongers migrating to London, Britain could see an increase in highly skilled professionals from its former colony. The UK may also make the immigration process for overseas workers easier and more welcoming in the future in order to combat the potential issue with EU workers.
What’s to come?
Asking prices in London have increased for the first time in two years, showing signs of renewed confidence as Johnson assures Brexit’s definite completion. Fears that Hong Kong life will become increasingly more affected by its political upheaval will drive Hongkongers towards migration in Europe, Singapore and Canada. Whilst the pound is weak, the UK is attracting Asian investors and provides an opportunity for Hongkongers to form a contingency plan in the case that they wish to abandon their hope in a future solution to the political struggle that is currently taking place.