Key Takeaways:
- Hong Kong stocks drop to 2009 low after Xi Jinping enters third term of China's premiership.
- The city looks for alternatives like Bitcoin to attract capital.
- That is despite China's ban on cryptocurrencies.
BALI (CoinChapter.com) — Hong Kong stocks dropped to their worst since 2009 after Xi Jinping retained his control as China’s premier for the third time.
Chinese Influence Rocks Hong Kong Economy
The city has been suffering an economic blow since it was subjected to a hostile takeover by China. Lately, it has witnessed two back-to-back quarters of contraction. Meanwhile, most analysts believe its year-to-date economic performance will be flat.
In 2020, China’s communist authorities imposed a draconian national security law on the city. Then, they elected their lapdog-styled individuals to key decision-making positions while dismantling civil society. Notably, some 140,000 people have left the workforce since.
Hong Kong is facing additional downside pressure from persistently higher global inflation, Federal Reserve’s rate hike, draconian Covid-19 measures, and a worsening slowdown in China. As a result, its once-hot real estate sector, which has fallen to a three-decade low, risks plunging further by 30%, warns Goldman Sachs.
The disastrous experience has prompted Hong Hong to look for avenues that could help the city sustain the heavy economic blow. And it appears Bitcoin could be one of those solutions.
Ducking China’s Bitcoin Ban
Meanwhile, Hong Kong has assured investors that its policy on Bitcoin and similar cryptocurrencies are different than the one imposed by mainland China, insomuch that it may allow cryptocurrency exchanges to offer retail investment services.
“The “one country, two systems” principle forms the basic foundation of Hong Kong’s financial markets. It shows just how separate Hong Kong is from the mainland,” noted Elizabeth Wong, director of licensing and head of the fintech unit of the Securities and Futures Commission (SFC).
If true, Wong’s remarks would mark a shift from SFC’s policy on crypto investment, which bars professional investors from trading Bitcoin and other assets on centralized exchanges. Professional investors are the ones that hold at least HK$8 million (~$1 million) in their portfolio.
In addition, regulating cryptocurrencies like Bitcoin could also pave the way for offshore blockchain companies to set up bases in Hong Kong.
