Australian dollar falls as Hong Kong protests intensify

The Communist Party of China has a problem and it’s name is Hong Kong, via SCMP:

In a fresh display of defiance against the contentious extradition bill, protesters who had camped overnight at Tamar Park in Hong Kong began stopping traffic from accessing the legislature on Wednesday morning, as the government’s proposal returns to a full council meeting.

As tensions mount, police say protesters are gathering bricks from pavements. Meanwhile, the Legislative Council meeting due at 11am was delayed with no indication of when it would resume.

On Sunday, a historic march turned roads along Causeway Bay to Admiralty into a sea of people as organisers claimed 1.03 million took part. Police estimated attendance peaked at 240,000. The mass march ended in chaos as scuffles between police and radicals broke out, spilling over into the early hours of Monday.

Despite mounting pressure and death threats, Chief Executive Carrie Lam Cheng Yuet-ngor has stood firm, insisting that the bill will be passed as soon as possible, with a final vote expected as early as next Thursday. Lam has insisted that the legislation is needed to plug legal loopholes and prevent Hong Kong from becoming a haven for fugitives. Follow our live blog below for events as they unfold.

Beijing has backed down for now, at Bloomie:

Hong Kong’s legislative chief postponed to an unspecified time debate on legislation that would allow extraditions to China after thousands of protesters converged outside the chamber demanding the government to withdraw the bill.

But this is a fight to the death for HK. For perhaps Beijing as well.

100k Aussies live there. Does ScoMo have a plan to manage the CPC?

Markets are relatively calm but the Aussie dollar has been falling for the past few hours:

Maybe it can’t see a plan, either.

Comments

    • Most will shift to USD. Dollar looks strong, housing in most parts are affordable.
      AUD could easily go to 55c USD with a falling housing market that is still overvalued. Doesn’t look attractive to me.
      Others have ties to the UK and will move there.
      Those who have money and have considered OZ or Canada already have managed to move it out months, even years ago before China has clamped down.

      • This makes sense and I wanna believe this DPM but what Triage says could also ring true. I guess some HKers are in each position.

      • Well you can look at the data; We have gone from around a long term average of $12b to $75b peak at the start of 2017 to $12b now in foreign housing investment over the last few years. That was mainly from China and is the same story in Canada, the UK, US. That’s when the capital flight happened

    • I know a few HKer’s and pretty much all of their considerable wealth is tied up in the two or three HK units they own. When Maggie Thatcher spooked the horses about the HK handover/back HK real estate prices plunged by over 70% and developers were vitrually giving away completed units. If this gets out of control it would not surprise me to see a rush of HKer’s attempting to come to Australia under the humanitarian program because they will be lucky to own the shirts on their backs.

      • DominicMEMBER

        I wonder if this is the event that could ‘break the HKD/USD peg’. Capital flight means the HK property market will implode. The banks there are levered to the eyeballs too and heavily exposed to the USD. Things could get ugly very fast unless the CCP are more circumspect. But will they back down? A sign of weakness. What a conundrum for the politburo

      • This is the black swan no one picked. Massively leveraged banks on HK property about to implode, ripples washing round the world unpicking a host of hypothecated daisy chains, the finance sector pulling out and Hong Kong quickly emptying of those who can leave to be rapidly replaced by Han Chinese. This could get out of hand for the global economy very quickly. Taiwan must be having sleepless nights now and no doubt the Yanks are thinking hard about how to use this to put the big squeeze on the Chinese banking system. Global ramifications big time. Not good for Aus, except a flood of westernised Asians into our housing market as theirs plummets

  1. Wonder how HK real estate for sale listings are trending over the past week or two.

    • The SCMP reporting would be laughable if it wasn’t so serious:

      “Sunday saw thousands hitting the streets to protest against the extradition plan. Organisers claimed 12,000 took part in the rally, which would make it the biggest public demonstration since last year’s annual July 1 march, but police put the figure at 5,200 at its peak.”

    • Kyle Bass nails it. Hong Kong as we know it is toast, and much of their banking system too as their reserves run out and property leverage topples over

  2. Just went down there from the office, its huge, people everywhere and they look prepared for a fight, wearing safety gear, helmets etc…the gvt delayed the debate as this time they got the hint that it aint going to be peaceful.

    • rob – the Cantonese can be a contankerous lot, even the language sounds agressive. Hopefully the leaders in Beijing have learnt the lesson of Tiananmen Square and give the protesters a way of backing away with their dignity intact.

      I did some travelling in provincial China a few months after Tiananmen Square and the negative effects on the local economy were still obvious then. A repeat of Tiananmen Square in the centre of HK would be of a different magnitude altogether.

  3. TailorTrashMEMBER

    When the PLA moved into HK to garrison after the take over in 97 they arrived in neat uniforms and white gloves ….not a gun in sight …….last week when the PLA navy
    sailed into Sydney harbour they were decked out in combat helmets and guns were at the ready on deck ……….no small wonder the HKers are getting anxious
    ……..Straya better polish up its refugee policies ………cos if this blows Manus and Nauru won’t cut it ……..

  4. This will be the end of HK. It will become another Chinese backwater. Such a shame. HK used to be a great city.
    Of greater interest though it Kyle Bass’ latest view on HK whereby the HKMA has expended 80% of its foreign currency reserves defending the decades old HKD peg to the USD (seen here on Real Vision via youtube: https://www.youtube.com/watch?v=ZBl05xNq_AU). This would indicate that the HKD might need a new peg completely (CNY) or adopt a floating rate or at very least a much wider peg to the USD. This will bugger up HK RE and make KKD convertibility (at value) an increasing challenge for the locals.
    The smart money is already getting the f$%& out of HK.
    As always, in times of crisis watch watch the rich do…..then follow.

  5. Shut down the refugee program forever (pull out of the UN convention on it)

    Shut down the student visa program forever. Immediately disallow students from working. Increase the 457 Visa to $100k min salary effective immediately.

    Offer all Hong Kongers under 40 or with those with kids under 10 refuge in Australia. That’s a refugee policy I would support.

    Overnight we would replace 1 million dodgy Indian visa cheats ) (overwhelmingly male) with 1 million hard working high-IQ Cantonese young people (mostly female).

    Imagine what this would do for house prices and the economy!

    If we are going to flood Australia with people at least do it with high-IQ Euro-Asians

    • DominicMEMBER

      Zero chance any of your wishes will come true. It’s Uber all the waaaaaaay ….

      • We had the White Australia Policy to protect the working class and keep wages high.

        Now we have the Brown Australia Policy to do the exact opposite.

    • The median age in Hong Kong is 43.2 years, the population of Hong Kong is 7.4 million and you reckon it’s a good idea to let any Hker under 40 or with kids under 10 in as refugees. That’s about 3.5m people einstein. And other brilliant ideas to showcase how high an IQ you have?

      • hmm, I read between the lines and this I think is the main point of that post.
        ” … Cantonese young people (mostly female) …”

        The rest of it is just a ruse.

  6. Naive punter here, but if things get really bad, what is to stop Hong Kongers declaring independance from China? Singapore already proves such a size country would be perfectly viable.
    Provided they established some sort of election/referendum (sanctioned or not) and a large majority voted to leave, what is preventing them (besides Chinese military force)

    This would force the CCP to roll out the military/commit a public genocide or let them cede. The reaction from the rest of the world would be very interesting.

  7. I’m surprised no one has mentioned “pitch forks and barricades” down here, never gunna happen as we are too lazy. Been a long time since we had the balls to do that. Protesting like that would mean going without and would interrupt watching property prices going up.