Will Half Measures Bring Back Visitors & Expats?
By Vivian Kwok, Executive, SEC Newgate. We were delighted to welcome back former intern Vivian last month as a full time employee.
By now, we all know that the Hong Kong government has finally eased the strict Covid-19 travel curbs by introducing its new “3+4” quarantine arrangement. Under the new directive, visitors will spend three days in designated quarantine hotels and undergo four days of home medical surveillance. Surprisingly, these individuals are allowed to leave their home, take public transport and even go to work during the medical surveillance period, while being subjected to Amber Code rules. These rules include being required to do rapid antigen tests and fever tests every day and being banned from joining mask-off activities or entering high-risk places such as restaurants, bars and gyms.
With this update, I expect many share the same question – is Hong Kong on track to fully reopen to the world?
Reconnecting Hong Kong with the world
Chief Executive John Lee Ka-chiu said recently in a briefing: “We want to reduce the impact from quarantine on our economic activities as well as our connection with the world.” The new arrangement should be seen as attractive to both leisure and business travelers. According to data from Trip.com, flight bookings from London and Singapore to Hong Kong surged by 249% one day after hotel quarantine was reduced. Tourists and corporate executives can now visit Hong Kong and experience less hotel quarantine time and its accompanied cost.
The new measures could boost economic activity. For example, sentiment of retail and office property developers and landlords is likely to improve. Market pundits believe that the luxury retail market will be a major beneficiary, and rents of bricks-and-mortar stores in primary shopping districts are expected to rise if the reduced quarantine measures stay in place. Might the government’s recent downgrading of the GDP growth forecast for 2022 by 0.5% to 0.5% be overly pessimistic?
Stemming the brain drain
It is possible that this marks the end or at least a slowing of the so-called brain drain and talent exodus. The Census and Statistics Department recently reported that the city saw a decline of 121,500 residents in the year ended June 30, leaving the population at approximately 7.29 million. Hong Kong’s population is in its third year of decline, and this is the biggest drop recorded in at least six decades.
For financial services professionals, the new quarantine arrangement could be a positive step forward, as more international activities can take place physically in Hong Kong again. The SAR is ready to welcome the return of the Rugby Sevens – a key sporting and business networking event for the city – and is set to host a Hong Kong Monetary Authority (HKMA) financial forum this November. Previously, Wall Street’s biggest banks have allegedly made quarantine-free travel a precondition for senior executives to attend the conference organized by the HKMA. Will the new measures meet the demands of these banks? Or, come November, could all quarantine restrictions be lifted?
Cutting out the quarantine requirement entirely is an important next step if Hong Kong is to meaningfully reconnect with the world and regain its reputation and status as an international financial hub. Meanwhile, Hong Kong continues to report more than 5,000 Covid-19 cases a day, the highest daily numbers in more than four months, with some speculating that actual case numbers are much higher. Let’s hope that updated quarantine rules, which are likely to bring more imported cases into Hong Kong, don’t cause the government to change its mind.