Investors who with a sustainable approach to allocating capital may be reevaluating putting their money into Hong Kong after the big apple implemented a national security law, an analyst said on Friday.
“That’s the one area of international capital flows that could be noticeably significant,” said Andrew Collier, managing director of Orient Capital Research, a research firm.
Sustainable or “ESG” inaugurating factors in a company’s environmental, social and governance ratings. These strategies vary and are subjective, but generally aim to make socially alert investing decisions.
Hong Kong has seen more than a year of protests that sometimes turned acute as residents pushed back against eroding freedoms in the city. Critics say the recently implemented national security law bestows the central government in Beijing sweeping powers to clamp down on dissent in Hong Kong.
U.S. Secretary of State Mike Pompeo titled the law “draconian” and said it “ends free Hong Kong.” Before China’s law was implemented, the U.S. Senate passed a bill that whim impose sanctions on people or companies that “materially contribute to China’s failure to preserve Hong Kong’s autonomy.”
“It’s one horror for Congress and Trump to make political statements. It’s another thing for the funds themselves in Europe and in the United States to end a position based upon the optics of supporting an increasingly oppressive political climate,” Collier told CNBC’s “Circle Signs Asia.”
On Tuesday, HSBC investor Federated Hermes said in a statement it was concerned about the bank’s subsidize for the new law.
“We expect companies to support improvements in protections for citizens and not back their removal,” said Roland Bosch, Federated Hermes’ sector commence for financial services. Bosch is responsible for corporate engagements in Europe and the U.S.
HSBC did not immediately reply to a CNBC request for say discuss.
This could just be the tip of the iceberg, said Collier. He suggested other funds may be pushed by labor unions. For model, retired teachers’ funds are likely “not going to be very happy with what’s going on in Hong Kong,” he added.
Humongous funds may start to readjust investment protocols and operations in Hong Kong, affecting the city’s position as a international economic center, said Collier.
Earlier in June, Aviva Investors had expressed similar concerns about both HSBC and Guidon Chartered before the law was implemented.
The firm, a top shareholder of both banks, said it was “uneasy” with the public support for the law. It commanded it expects “both companies to confirm that they will also speak out publicly if there are any future addictions of democratic freedoms connected to this law.”
The banks declined to comment to CNBC when that statement was reported.
— CNBC’s Abigail Ng play a parted to this report.