Hong Kong and Macau Count the Cost of Typhoon Hato

 | Aug 24, 2017 | 10:00 AM EDT
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Hong Kong, Macau and Guangdong Province are today counting the cost of Typhoon Hato, which barreled into the southern China coast on Wednesday. It's only the third Typhoon 10, the most dangerous rating of storm, since Hong Kong's handover back in 1997. 

So far, 12 people are known to have died -- eight in Macau, often drowned in underground carparks, and four in Guangdong Province. Although no one died in Hong Kong, 129 people were injured, joining the 150-long casualty list in Macau. There are tree limbs and plant debris everywhere I look, walk and drive. In all, 1,057 trees were felled in Hong Kong alone.

Any economic cost pales in comparison to the human one, but is significant. The stock and futures markets shut down for the day, and businesses closed their doors. Even public transport calls it quits in the face of a T10. Only one flight, helmed by a brave KLM pilot, landed at the storm's height. That left plenty of frustrated flyers stranded at Chek Lap Kok.

Hong Kong has more skyscrapers than anywhere on the planet, and glass blew out of a few of the windows at the office buildings in Central, Hong Kong's Wall Street, so it's just as well employees are told to stay home. A crane came loose, although it fortunately didn't fall. In one apartment complex in Hung Hom, the building management are answering uncomfortable questions after a gondola used to clean the windows on a high-rise block came untethered, smashing through the front of several apartments.

I've been here for two T10s, Hato and Typhoon Vicente, which crashed into the city in September 2012. The only other such storm in post-colonial Hong Kong was Typhoon York, which landed in September 1999.

T10s are impressive beasts to behold. It's a cliché, but it's also true that at those times you can only stand in awe at the power of nature. Possessions and stock portfolios suddenly pale in comparison.

During Vicente, I was forced out onto my house's roof to clear out the clogged drains before my entire place flooded. The wind was driving the rain sideways in bands. I was soaked in seconds.

With Hato, there wasn't the same volume of rain. But the winds were even stronger, rattling my windows to the point where I though the pressure might blow them out. I was inland, so I can only imagine the shock out at sea. Shipping was driven into rocky shores and some ferries into mainland China are suspended indefinitely.

Normally I'm pretty blasé about the warnings from the Hong Kong Observatory to stay indoors and avoid any travel at all during a big storm. It's the black rains that worry me more than the typhoons, since the deluge produced can be disastrous as it courses down Hong Kong's steep slopes. Slope slides are common. But for Hato, this was one time I'm glad I listened to the Observatory's advice. It really was a killer storm.

Coincidentally, it is 25 years since Hurricane Andrew smashed into the Florida coast, causing what was at the time a record amount of damage for a natural disaster. The storm, which landed on Aug. 24, 1992, caused 55 deaths in Florida, Louisiana and the Bahamas.

With Hato, Macau took a full-frontal hit. It saw much greater disruption than Hong Kong, due to a massive power outage that still isn't fully fixed as I write. Residents have also been struggling to find fresh water, forced in some cases to line up in the streets to carry water home in buckets, like in days gone by.

The problem in Macau is that the city gets 82% of its power from mainland China and the neighboring city of Zhuhai. Safety standards in mainland China are often laughable. Excellent policies on paper simply aren't enforced in real life once there's a little bribery money to grease the right palms. No surprise, then, that the systems didn't work, and the backups also failed when called upon.

The light outage has hit Macau's casino industry hard. Counting cards is hard enough with the lights on. And no one (on the industry side!) wants to be counting chips in the dark!

Most hotels went offline and couldn't check in guests, resulting in a two-day disruption. By today, hotels like the Galaxy in Cotai, owned by Galaxy Entertainment Group (GXYYY) , were able to register newcomers. But nearby, the Wynn Macau, under Wynn Resorts (WYNN) , still had its systems knocked off, rendering it unable to welcome new customers. The Venetian and next-door Parisian, part of the Las Vegas Sands (LVS) empire, were running on backup power without air conditioning or proper lighting.

Hato was the first significant such disruption to Macau's casinos since Stanley Ho's gambling monopoly was broken up in 2001 -- in fact, Macau's chief executive says it was the biggest storm to hit the city in 53 years.

With two days of gambling and hotel stays lost, Nomura calculates that the industry has given up 1.3 billion patacas ($157 million). That's enough to shave around seven percentage points off August's gross gambling revenue.

Typhoon Vicente did affect Macau in 2012, but led to no blackout. Transport problems that stopped guests from arriving and gamblers from hitting the tables knocked two percentage points off the gambling take back then. But there was little to no impact from Typhoon Usagi, another major storm that passed through in 2013.

There's been some black humor in the face of disaster. Near-term softness in casino stocks, which mostly have U.S. operations as well as those here in Asia, "is related more to the stormy dysfunction in Washington than to Macau's weather patterns," Nomura concludes. 

Hato led to isolated black-market gouging. In a couple of stores, bottled water started selling for 150 patacas (just under $20) per two bottles. But other stores handed it out for free. In Hong Kong, volunteer groups have been picking up trash strewn by sea waves. The disciplined services have done a first-rate job of making the city operational in less than a day. The city is storm-resilient. 

Major typhoons seem to come in cycles. We are expecting more due to climate change -- summers are definitely more sweltering here than when I arrived in 2001. But having two T10s within five years is either coincidence or the possible start of a new cycle.

There's been Hato in 2017 and Vicente in 2012. They were preceded only by York in 1999, and then you'd have to go all the way back to 1983 to find a T10 storm. But they were surprisingly common in the 1960s and 70s, when there was a total of nine T10s.

We'll be ready when there are more.

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