in China , Hong Kong ,
I haven't written in a long time, so I decided to rewrite this Wall Street Journal article Look Elsewhere for Chinese Shoppers, Political Tensions Are Bad News for Hong Kong Retailers because it's clear from the actual body of the article that if there are political tensions causing problems for HK retailers, it's tension on the other side of the border with Xi Jin-ping's purges.
So here goes my rewrite:
Many of the Chambers of Commerce in HK as well as members of the Chinese Communist Party's United Front in HK and Western media have said that HK's 'chauvinist fringe' have or will have a negative impact on HK's economy. The statistics on actual visitors from the mainland to Hong Kong paint a different picture. Actual arrival numbers from the mainland continue to rise. (Please remember arrival numbers include tourists, personal tax arbitrage shoppers, and possible multiple daily entries by parallel goods traders tolerated by the CCP due to low-quality low-confidence goods on the mainland.) There are some negative numbers involved though. Sales of high-ticket ostentatious items fell by 24.5%: gold, luxury watches and other items associated with bribes/laundering corrupt cash.
This drop in sales has been associated by many observers with the arrest of party members on charges of corruption. (Be aware Xi Jin-ping has also convicted many anti-corruption citizens for demonstrating that the current 'anti-corruption program' is another big wind from the center to allow factional purges.) Another possible explanation is cash tightening on the other side of the border due to a pause in the property bubble causing a ripple effect in 'shadow banking' products. On the other hand no one beyond the looniest of United Front spokespersons has suggested the drop is due to HK's 'chauvinist fringe' calling anyone a locust.
Of course no one has suggested that the drop in mainland purchases due to anti-corruption purges on the mainland might actually support some of the contentions by HK's 'chauvinist fringe', for example that cash pouring into HK's retail and residential property markets wasn't legitimate and that the economic dislocations on commercial property rents and occupancy were harmful and unsustainable. As they say in San Francisco, eviction is death, push out mom & pop shops for big chains selling products unwanted by locals and you're exchanging family livelihoods for some minimum wage retail jobs and diverting the profits to the tycoons owning the chains. This is further supported by the drop in the stock prices of retailers that sell a huge proportion of their goods to mainlanders, when it was floated to curb mainland visits by 20%.
As for buying HK stocks, my advice is simple. HK's government has designed the economy around 2 pillar industries: labour exploitation and skim. If CCP continues their recent push of ongoing near-permanent stimulus cash injections and Team CronY continues to walk back limitations on corrupt money flooding HK's residential property markets, then HK's stocks will almost surely be stable at worst. If the US economy rebounds and provides a market for HK businesses to skim a percentage on goods trans-shipped via HK, it's a short-term buy and don't ask about the long-term, because you don't want to worry about missing out on those stock profits NOW NOW NOW!