Hong Kong might battle its way back to relevance as a global financial center. The city is finally announcing today that it will eliminate mandatory hotel quarantine for arrivals, effective Monday, September 26.
Taiwan made a similar move on Thursday with the decision to scrap a mandatory quarantine as of October 13. Taiwan will now implement a "0+7" system, with self-monitoring for seven days on arrival.
Hong Kong is adopting a "0+3" plan. For the first time since March 2020, travelers can leave the airport immediately under their own steam, even taking public transport. Their mandatory health-code app will be "yellow" for 3 days, barring them from high-risk venues including restaurants and bars. But they can stay where they want, the code turning "blue" if all their tests prove negative.
And it's all go as far as booking travel to Asia goes - Japan will allow visa-free individual travel once again, it says today, effective October 11. That scraps a requirement for non-nationals to arrive on group tours.
Japan only started allowing visitors in at all in June so long as they came on travel-agency tours. It will now scrap its daily cap on visitors, currently at 50,000 arrivals. And it will no longer require a negative Covid-19 test before departure as long as the person is vaccinated.
The impact on travel-and-recovery stocks should be profound. Due to high traffic crashing the site, I'm currently locked out of visiting the Web site of Hong Kong's flagship airline, Cathay Pacific (CPCAY) and HK:0293. I have been placed in a waiting room with a 15-minute timeline before I can get on the page.
Watch for consumption stocks to rally in Tokyo, Taipei and Hong Kong, although it is a long road back for these companies. Cathay issued a statement welcoming the Hong Kong government's move. The carrier says it intends to add more than 200 pairs of flights in October on both Asian and long-haul destinations. Thanks to Japan's rule changes, Cathay will resume daily flights to Tokyo's Haneda airport from November 1, as well as ski-trip-friendly flights to Sapporo four times per week as of December 1.
While Hong Kongers are clearly desperate to travel again, places like Japan and Thailand will not yet welcome back their chief source of travel business, Chinese travelers. That's because mainland Chinese citizens are still required to do two weeks of government-organized quarantine when they return, ruling out voluntary trips.
Cathay stock was initially hammered by the pandemic. It fell 55.2% from the end of 2019 through the start of August 2020. But it has enjoyed a solid rebound since the end of October 2020, meaning it is now "only" 22.6% below its pre-pandemic levels. The recovery should continue.
It and other travel-and-consumption plays have been absolutely pummeled by Hong Kong's long, long insistence on forcing travelers into pokey hotels, at their own expense, with a quarantine that was as long as 21 days. Quarantine has very slowly and gradually come down to the current three nights of stay, but that too will be removed as of Monday.
Japanese Prime Minister Fumio Kishida, who went to elementary school in Queens while his father was working for the Japanese trade ministry in New York City, outlined the changes in Japan's travel policy in a speech to the New York Stock Exchange. Kishida is in town for the United Nations General Assembly, which he addressed on Tuesday.
Japan will host the G7 next year at a summit in Hiroshima. "I am resolute in my ambition to make Japan as prosperous and energetic as the New York of my childhood and as the NYSE itself," he said at the exchange.
Hong Kong will host a financial conference in November put on by its central bank equivalent, the Hong Kong Monetary Authority. One of the city's biggest sporting events, the Hong Kong Sevens rugby tournament, is also due to take place in November, for the first time in three years. Hong Kong literally would not have had enough quarantine hotel rooms to cope with the incoming passengers for the two events. So like many of the Hong Kong government's decisions, lifting quarantine is driven only by necessity.
Kishida was really playing to the crowd at the NYSE. He said he takes the example of his "favorite player" Shohei Ohtani to tell him that his New Form of Capitalism must "hit and pitch" by promoting both growth and sustainability. Kishida, elected as Japan's 100th prime minister last year, pledged on the campaign trail to promote this New Form of Capitalism, although no one is too sure what exactly that means. He initially said he had a broader distribution of wealth in Japan in mind as the main goal. But he has shifted his definition to explain that "new capitalism" requires the public and the private sectors to work together.
OK then. What we can take from the announcements today and yesterday is that East Asian governments will no longer hamstring their economies by restricting travel.
Mainland China is of course the extreme outlier. China still requires a quarantine for anyone arriving from abroad, currently of 14 days. There then follows a period of self-quarantine and health monitoring, with restrictions on what you can do gradually lifted throughout. Of course, there are multiple rounds of Covid-19 testing involved.
I went through a quite ridiculous round of Covid testing on arrival back in Hong Kong from Europe last month. There were five PCR tests, daily RAT tests for 10 days, plus a mandatory three nights in an expensive hotel. And I was only allowed on the plane back to Hong Kong from Amsterdam in the first place because I am vaccinated, and after tracking down a place to do a PCR test. That was difficult since the Netherlands and Europe in general have scrapped testing requirements, allowing life to get back to normal. My family were the only people getting tested at the facility in downtown Amsterdam, with one staffer doing the check-in, admin and the test itself.
These rules for travel to Hong Kong were very complex, expensive to follow, and left travelers at risk of having all their plans disrupted if they unexpectedly tested positive. A friend of mine was left in exactly that situation in August. Her PCR test came back positive the night before her flight to Hong Kong, leaving her in a panic. Bizarrely, the testing lab then sent an email later that night instructing her to ignore the positive test, and that the lab would re-run it the next day. Somehow the next-day test came back negative - although the lab didn't explain itself, the first test must have thrown up a false positive (she'd already had Covid), or been contaminated. But it left my friend to wake up the morning of her flight uncertain whether she could go.
All these hoops contrasted dramatically this summer with the attitude when I arrived in Europe. My family of four got PCR tests pre-departure in Hong Kong since, officially, our first European port of call, Portugal, didn't recognize Hong Kong vaccinate certificates. The tests, around US$50 each in Hong Kong, proved useless since no one checked vax certificates or test results when we got to Lisbon. There are no checks heading into the United Kingdom - at least the rules were clear. The Netherlands also supposedly required vaccine certificates on arrival from post-Brexit Britain. But again, no one checked anything on arrival.
The bottom line is that Europe is open and easy for travel. Yes, Covid is a concern. But it's a manageable disease much like many others with which citizens must contend.
Hong Kong, Taiwan and Japan have with these announcements come to the simultaneous conclusion that Covid is here to stay. Equally, with high rates of vaccination, hospitalizations and deaths are rare, and at manageable levels for the health-care system.
Asia is getting on with life, just like Europe, albeit several months behind. It's about time.