COVID-19 Has Ripple Effects Across the Market
The post-Chinese New Year period is invariably a time of high activity in Hong Kong. The markets emerge from the extended lull of the Christmas holidays running into the Lunar festivities before a surge as many firms rush to close off billings before the end of the financial year (or at least one iteration of it) and gear up for the forthcoming year. However the emergence of the new coronavirus, or COVID-19 as it has now been officially titled, has not only significantly reduced foot traffic in the Central Business District of Hong Kong, albeit on a much smaller scale than in Beijing and Shanghai, but has hammered commercial activity across the Greater China region. Obviously this pales into insignificance next to the cost in human lives and associated fear of further outbreaks. But even in an age, and a city especially, where seemingly everybody is electronically connected via various outlets the physical dislocation has proved to be more problematic than may had initially envisaged. A global legal industry that increasingly prides itself on being able to provide a 24/7 service when required is now having to wrestle with logistics on a new level. With travel in and out of the region a suddenly much-reduced option, the realities of having to commit to frequent conference calls between, say, Hong Kong and San Francisco are hitting home (or more pertinently having to decide which side will be up at twilight). A story reaches us that one senior lawyer was only allowed to make a business trip between the US and Asia if he agreed to stop off in Europe for an extended period of self-quarantine – maybe not entirely unpleasant, but not practical, and almost certainly not unique. As numbers of confirmed cases of the virus increase outside of Asia one wonders how long even that less-than-convenient loophole will continue to be in play.
Despite the theoretical ability of everyone to work remotely, the practice has reportedly not been as successful would have been hoped. Frequently heard laments include longer than usual delays of phone messages and emails being replied to. Working from home in an economic dip are not circumstances one would expect to encourage unerring focus. After the months of tumult of the anti-government protests gave many inbound businesses pause, with conference and event cancellations grabbing headlines, the health crisis has seen a much greater impact in a much shorter space of time. And while one has brought respite from the other (temporarily?) the uncertainty over the level of contagion, and how long the city will be under restrictions (at the time of writing educations facilities and municipal institutions have had periods of closure extended into March, albeit the commercial sector has largely downgraded the working-from-home edict from mandatory to voluntary), means nobody can say when things will even begin to return to normal. The general consensus is that productivity is down, and it is not just due to a downturn in instructions. Opportunities to take leave must be compelling, notwithstanding any travel restrictions that may be a factor in holiday plans. Estimates in the market were that firm offices were around 20% staffed following the Government’s initial public transport travel warnings. Hong Kong had already entered recession before the virus hit so even the most fervent optimist is looking quite far into the future for reasons to be cheerful.
South East Asian markets remain active which is a beacon and the apparent speed level of precaution with which recent diagnoses have been dealt with will hopefully stem the spread of the virus, and the accompanying human impact and domestic upheaval can be contained.
Hong Kong, and Asia, has of course bounced back from similar setbacks before, with the most obvious recent comparison being made to the SARS crisis of 2003. Amid the uncertainty is a stoicism, and the general acceptance that the only options available are to be sensible in following medical advice, take sanitary precautions and, as with before, ride it out.