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The violent protests over the last 10 days in Hong Kong have left the city reeling. We're at Hong Kong Polytechnic University, where a small group of demonstrators remains holed up after police laid siege to the campus. The city's economy is in recession and the latest clashes have heightened concerns about Hong Kong's future as the financial centre of Asia. Companies are already fine-tuning contingency plans, setting up offices and sending staff to work abroad. And wealthy expats are thinking of moving permanently, especially after schools were shut for almost a week.
And now some investment firms could go to Tokyo or Singapore, both of which are trying their best to lure them. The Financial Times is reporting that a delegation from Tokyo is in the city this week wooing hedge funds. Singapore, meanwhile, has been quietly laying the groundwork for companies, such as wealth managers, to move to the city-state. At this stage the departures are a trickle of small, agile companies. The really big players are not moving wholesale yet. Big banks, global law firms, and other financial services groups have deep roots in the city and thousands of employees that are hard to move quickly. And Hong Kong remains the gateway to mainland China.
What might change that calculus? Companies are watching for any threat from Beijing to the city's independent legal system. Hong Kong has operated with a high degree of autonomy from mainland China under the one country, two systems model. That system ends in 2047. As one chief executive of a western multinational told me recently, the protests have accelerated strategic decisions he thought he would only have to take in 20 years' time. Companies are no longer thinking about the one country, two systems coming to an end as a far-off event, but as something that could be unravelling now.