Scraping the skies
Hong Kong’s iconic skyline, jam-packed with more skyscrapers than anywhere else in the world, has experienced a growth spurt in the past two decades. At present, the city’s International Commerce Centre – among the world’s top ten tallest buildings – towers over its neighbor with its 118 floors reaching a height of 490 meters. But in 1997, the city’s Central Plaza building took the top spot at a considerably lower 374 meters, remaining in this position until 2003.
Business as usual
Hong Kong’s position as a regional financial hub is not undeserved. The city was home to a total of 1,379 regional headquarters of businesses located beyond its borders in 2016, according to the Census and Statistics Department. In 1997, the city played host to 903 regional headquarters.
Hong Kong is one of the most expensive housing markets in the world, with the city often topping global rankings of the least affordable places to own a home in.
According to a survey from Demographia this year, which divided median house prices by annual median household income, Hong Kong’s score stood at 18.1. This was a higher multiple compared to Sydney (12.1), London (8.5) and New York (5.9).
One square meter of an average sized apartment in Hong Kong would have cost 83,159 Hong Kong dollars ($10,654) in 1997, according to data from the Hong Kong Rating and Valuation Department. The same amount of space roughly cost 139,349 Hong Kong dollars ($17,852) in 2016.
Buying an average-sized apartment in the city in 2016 would cost approximately 6.13 million Hong Kong dollars ($790,000). The average flat in Hong Kong in 2016 was around 470 square feet or 44 square meters in size, the South China Morning Post said.
Mind the income gap
Income inequality in Hong Kong is at an all-time high. A report from the Census and Statistics Department published in June reflected that based on monthly household income, Hong Kong’s Gini coefficient was 0.539 in 2016. A lower Gini coefficient represents a more equal distribution of income in a population.
The department did not estimate a Gini coefficient for the year 1997, but the figure stood at 0.518 in 1996.
A report on income distribution in the city by the census department attributed rising income disparity over the past 5 years to the growing number an acceleration in population ageing and more one-person households.
Who dominates Hong Kong’s markets?
The financial markets of Hong Kong have become increasingly intertwined with the mainland through the years, with the launch of the Shenzhen Connect in December last year an example of ongoing developments.
Of the 1,995 companies listed on Hong Kong’s main board and Growth Enterprise Market in 2016, 989 were mainland companies, according to data from the Hong Kong Exchange. In comparison, there were just 856 Hong Kong companies.
“About 60 percent of Hong Kong (listed) companies are actually from mainland China. Twenty years ago, it was about twenty percent. If you look at the IPO market last year, 92 percent were mainland companies,” Noah Holdings Hong Kong CIO William Ma told CNBC’s Street Signs: Asia Friday.
Back in June 1996, six of the 33 names on the Hang Seng Index were British-controlled, the South China Morning Post reported, citing HSBC and Swire Group as examples. Only two of the remaining 27 companies were mainland Chinese enterprises – Citic and Guangdong Investment.
While some Hong Kongers are downbeat over what they see as the increasing reliance of Hong Kong on the mainland, others believe the closer financial linkages between the two could prove to be symbiotic.
“In addition to (Hong Kong) just bringing foreign investors to China, there’s also the Chinese markets and Chinese investment going out (like) the ‘One Belt, One Road’ initiative … I think that will create more opportunities for Hong Kong in the future,” said Wang Tao, the head of Asian economic research at UBS Investment Bank.
Hong Kong today retains a separate currency to China’s yuan. The Hong Kong dollarhas been pegged to its U.S. counterpart at various rates over the past few decades, settling at its current $7.80 value in 1983.
According to a note released Wednesday by Natixis, “Hong Kong’s financial center role, being more important than its trade competitiveness, implies that a peg to the USD has so far been a wise option.”
But according to the report, the Hong Kong dollar’s tie to the U.S. currency “should be re-evaluated in the light of China’s increasing influence in the Hong Kong economy.” For example, Natixis cites that over 70 percent of total tourists in the so-called Special Autonomous Region are from the
Chinese mainland, and they account for around 8 percent of Hong Kong’s total GDP. Given that the Chinese yuan is yet to be fully convertible, Natixis instead suggest pegging to the euro as a potential interim solution.
Democracy under threat?
Following a provisional government in 1997 during the handover process, Hong Kong’s first Legislative Council election took place in May 1998. The 60 seats available were split between two camps, with pro-Beijing parties holding two thirds of the floor and pro-democracy parties representing one third.
The Legislative Council’s most recent vote took place in September 2016 and revealed a new twist in Hong Kong’s political story. On top of the traditional pro-Beijing and pan-democrat opposing party camps, new upstart candidates advocating localism – and even independence for the city – gained a handful of seats. The result demonstrated the increasing fragmentation of Hong Kong’s political landscape, with anti-China sentiment gaining ground particularly among the young.