Is Hong Kong "on the brink of total collapse," as the police say?
There's been a selloff, for sure. Hong Kong stocks are the main market mover in Asia on a down day, with the Hang Seng index off 1.8% at the close, triple the 0.6% drop in Tokyo. That's as a result of fierce work-day fighting this week that intensified last night, particularly at the campus of the Chinese University of Hong Kong, just down the road from my home.
It's an ebbing, not a total loss, of confidence. There was a drop of a similar magnitude on Monday, then a brief rise on Tuesday, leaving stocks off 3.8% these three days. I've been down to the barricades, and see that the students are firmly entrenched in a way that certainly has echoes of Tiananmen Square.
At the same time, the darling of China's new economy, Alibaba Group Holding (BABA) , is due to launch its roadshow today for a secondary sale of shares on the Hong Kong market. It's a vote of confidence, if the e-commerce giant starts trading its stock here on November 25 as planned. (Quite a big if, if you ask me!)
The company, due to price shares on November 20, would raise US$10 billion to US$15 billion in Hong Kong. Details of the week long roadshow for Hangzhou-based Alibaba's secondary listing came out today in the South China Morning Post - which you think could fact-check the story pretty well, since it's actually owned by Alibaba.
The Hong Kong Stock Exchange's listing committee has approved this listing, the SCMP says. Building on Alibaba's world-record US$25 billion New York IPO in 2014, the Hong Kong share offering would propel the city back to the top of the tables in terms of capital raised on any of the world's exchanges this year.
Sure doesn't sound like a total collapse. If there is to be a meltdown, it will be the police that brings it about. They are being egged on by a central government that keeps telling the force to crack down harder and harder on these dastardly pro-democracy student "terrorists" - a stability-obsessed dictatorship that sees unruly Hong Kong as a serious threat.
We've seen how China cracks down. We fear Beijing will bring its brand of justice here. Hong Kong police have behaved with impunity, very badly at times, shooting unarmed protesters while under no real threat to their lives. But it could be a lot worse.
The biggest collapse is the total collapse of leadership in this city. The city's crippled Chief Executive, Carrie Lam, says it is "wishful thinking" that the government will respond to the protesters, who she has dubbed the "enemy of the people." As usual, the government ignores the 2 million pro-democracy, pro-rights demonstrators who have marched in protest against these very leaders - Lam should have stepped down long ago.
She always does too little, way too late. Consider her response the last two days. Although most people are struggling just to get around the city, she refused to close government schools, which she says would "fall into a trap."
They are to be, very sensibly, closed tomorrow. Trap! After shortened hours on Monday, most private schools as well as all the city's universities suspended class the last couple of days.
It only makes sense. Flash-mob protests have at times brought traffic in Central to a standstill, with bricks and other obstacles set to pop tires for those who still dare to drive.
The greatest violence this week has for the first time been on university campuses, where the police chased demonstrators. They have cornered many of them in their lair, and they are behaving like trapped beasts. Some students say on social media they'd rather burn themselves up than be shot by police.
CUHK happens to be virtually a stone's throw from my house. So last night, I drove down to the university gates and then the local subway stop to see if any student demonstrators wanted a ride away from the chaos. Three demonstrators took me up on it, one pledging to return after a bit of a break.
My sister-in-law, who is a teacher, then along with the other passengers, had to leave the bus she was on. It too came to a standstill. I picked a meeting spot with her carefully amid all the closed roads - most traffic lights are not working, and there's debris even on open roadways - and tried to drive her to her home.
After spending from 9:15 p.m. to 1:15 a.m. on the highway last night, to make the 7-mile trip between the suburbs of Sha Tin and Ma On Shan, I can attest that the transport network sure isn't operating efficiently. The Tolo Harbour highway was gridlock heading past the CUHK campus, where the protesters seized a bridge over the eight-lane artery leading around the New Territories.
My sister-in-law and I had to turn back, and crash in my Tai Po home instead. She is a highly diligent teacher and was obsessed about making it to class today. She set off at 6 a.m. to do that. The schools really should have been closed, trap or not.
My kids have stayed home all week, since we've been virtually unable to get them to the gates. There's no guarantee once they get to the classroom how they will get home later that day.
There's a huge disconnect between what's happening to teachers, schools, high-street stores and hotels, and what's happening on trading screens.
The Hong Kong stock market revolves more around China's economy than the city's own, as I explained this morning on RTHK Radio 3's morning drive-time biz show, Money Talk.
So Alibaba, which in its final figures said it shifted US$38.3 billion in merchandise on Single's Day on Monday, will have an outsize influence on Hong Kong markets if it lists here. Tencent Holdings (TCEHY) , with a primary listing in Hong Kong, is the chief determinant of the overall performance of the Hong Kong market now.
You can look to property developers to get a sense of what's happening to Hong Kong-centric companies. That picture is a lot bleaker.
New World Development (NDVLY) was the biggest loser today among Hang Seng constituents, down 4.9%. Swire Pacific (SWRAY) , the conglomerate parent of Hong Kong's top airline, Cathay Pacific (CPCAY) , was down 3.7%. Sino Land (SNLAY) , a developer, top management has expressed support of the police and mainland foreign policy, fell 3.2%. Wharf Real Estate, (WARFY) , which operates a couple of flagship malls that normally throng with mainland shoppers, fell 3.7%.
I admire the principles for which the students and the demonstrators stand. Though I admire their imagination and effectiveness, their latest tactics have been turning a lot of people off. But after the Umbrella Revolution in 2014 closed Central for a while, and nothing changed, this time they are determined to have an impact.
What will the lasting one be?