Hong Kong Unrest Causes $5 Billion To Leave The City

Credit: Reuters

The unrest in Hong Kong has been going on for over 5 months now, and it’s been taking a toll on the local economy.

The recent riots in Hong Kong have led to a capital outflow costing the city over $5 billion since April, according to the Bank of England. This figure represents about 1.25% of Hong Kong’s GDP. The capital flight began in April, when protests broke out in the streets over a proposal to allow suspects in Hong Kong to be extradited to Mainland China. After weeks of protests, the demonstrations broke out into full-scale riots, which sent Hong Kong into its first recession since the 2009 financial crisis.

The Bank of England report reads “These political tensions pose risks, given Hong Kong’s position as a major financial center.” The report makes note of how Hong Kong’s property prices have dropped by more than half.

Despite all the bad news, the Hong Kong Dollar did rally to a five-month high last week. However, Hong Kong’s Central Bank denies some of the factors in the report. One spokeswoman told reporters “According to the latest statistics on deposits and money supply, as well as the latest financial market situation, there was no noticeable outflow of funds from Hong Kong dollar or from the banking system…”

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