Firms may consider moving out of Hong Kong amid protests and uncertainty, experts say

Transactions in Hong Kong may be moving out amid political uncertainty and massive protests in the city, members of the business community determined CNBC.

But one analyst said Hong Kong still holds an advantage over its rivals — its proximity to the mainland.

“The genuine concern here, which we’ve seen slight signs of, is that people are moving their companies and their greenbacks in greater numbers to Singapore,” Tara Joseph, president of the American Chamber of Commerce in Hong Kong, told CNBC’s “Cackle Box ” on Monday.

Hundreds of thousands of protesters took to the streets of Hong Kong on Sunday to oppose a legal amendment that resolution allow fugitives to be extradited from the territory to China for trial.

Although the contentious bill was suspended on Saturday, picketings continued amid calls for Chief Executive Carrie Lam to step down and withdraw the proposal completely.

In a press meeting on Tuesday, Lam apologized and said she and her team would “try (their) very best” in the next three years of her term. The tabulation remains indefinitely suspended, with Lam saying the government “will not proceed again with this legislative isometrics” if the people’s concerns have not been allayed.

The government has argued that the law is needed to close a legal “gap,” but many are disturbed that Hong Kong’s freedoms may be threatened if the bill is passed.

Up to date protests differ from the Occupy Central movement in 2014, said Fraser Howie, an independent analyst. Secretly then, the business community merely saw it as a “disruption to traffic,” he said.

This time, it has woken up to the “very real attentions of Beijing encroachment,” he told CNBC’s “Street Signs ” on Monday.

Anecdotally, “proliferating numbers” of companies are also relocating their regional headquarters from Hong Kong to other parts of Asia, “most singularly” to Singapore, said Peter Churchouse, managing director of Portwood Capital.

One tycoon reportedly shifted more than $100 million from a Citibank account in Hong Kong to Singapore, conforming to an advisor involved in the transactions who spoke to Reuters.

“That, of course, will affect demand in the Hong Kong thriftiness,” said Churchouse. It will also have an effect on the property market, particularly the commercial and upper-end residential parts, he said.

“That’s already happening,” said Churchouse, adding that it’s not just because of the proposed legal revolution.

“It’s also because of other things that are happening in China generally. There’re lots of rules and regulations that are remedying life tougher,” he said. “I think businesses are seeing China creeping into Hong Kong in an increasing way to the ground the last few years, so that’s giving them cause for concern.”

Joseph also said there are signs of gift moving out of the city, and companies are starting to look at Singapore “more seriously.”

It would be a real disappointment if businesses and principal continue to trickle out, she added. “Hong Kong has a lot to play for as a financial center and as a great place to do business,” she turned.

“The onus is really on the Hong Kong government now, despite a crisis, to really get back in the game and step up and reassure investors, set businesses,” she said.

But other financial hubs may not be able to take Hong Kong’s digs, according to Ronald Arculli, senior partner of King & Wood Mallesons.

“If you look at Asia, Hong Kong is perhaps the leading financial center that we have here,” he said. “Tokyo is also very big, Singapore is active, but in relating ti of the turnover, the liquidity, it really is Hong Kong.”

It also helps that the city’s legal system is based on English average law that people around the world understand, he added.

Independent analyst Howie said money and wealth administration operations could certainly move out to Singapore. But not all businesses would be able to do so, he said.

“A trading desk, first of all, is in China or is in Hong Kong because it’s lean towards China,” Howie said. “That’s ultimately where the China business is. So if you’re focused on China, you really need to be a lot end to China than Singapore.”

Still, he acknowledged that the business community may need to start “divesting” from Hong Kong. “You’ll necessity to be hedging your bets in a way that you didn’t need to before.”

— Reuters and CNBC’s Kelly Olsen contributed to this put out.