REIT ASIAPAC MAGAZINE REITASIAPAC 3Q 2019 ISSUE | Page 8

REIT ASIAPAC HONG KONG REITS PERFORMANCE student protest and the student unions do not represent the protesters. The apparent lack of leaders also means that the situation is particularly fluid. AGAINST THE HANG SENG INDEX While REITs initially stayed rangebound at the start of the protests, they have since fallen about 16%. However, they remained slightly positive year-to-date. As the movement has dragged on, retail sales growth has weakened throughout June and July. The lack of a resolution has hit confidence in the short term. Crucially long term prospects depend on how the movement is resolved. 2014 Umbrella Movement occupied Admiralty and Mong Kok, the former being Hong Kong’s political centre and the latter being Hong Kong’s commercial centre. In 2019, however, protesters have not mounted any long-term occupation. Even if roads were blocked, they were cleared in hours. This extends the stamina of the movement, as protesters go home every night and few commercial activities have been disrupted for extended periods. Secondly, the 2014 Umbrella Movement could be described as a youth movement, but the 2019 protests saw more actions from other age groups. Granted, the young generation is still at the forefront. A construction supply shop, for example, wrote in an article about a 13-year-old boy who bought a helmet with pocket money. But the older generation has also been more involved. In the Shatin protest on July 14, multiple video feeds showed older residents refusing police entry to their buildings. W H AT W I L L H A P P E N A F T E R 2 0 4 7 ? For two decades, the major political movements all revert back to a simple but central question: How should the social contract between the government and the people in Hong Kong be arranged? Since the 1997 handover, Hong Kong has been governed under the “one country, two systems” protocol, supposedly in place for 50 years until 2047. In 2047, many of the readers of this magazine and I will be retired. But the 13-year-old boy who bought the construction helmet will only be 40 years old and will be in his professional prime. He is, on top of the immediate triggers, trying to seek an exact clarification on the arrangements after 2047. This is perhaps the real fuel that has driven the movement into a second month and beyond. ORGANISERS RANGE FROM MOTHERS TO COUNCILLORS On September 4, Chief Executive Carrie Lam announced the formal withdrawal of the extradition bill. It meant that the government had finally acceded to one of the protesters' five demands. While this is a positive development, it has not answered the deeper question of Hong Kong’s future after 2047. The long-term investment merits of Hong Kong depend on when and how this clarification is reached. Third, the current protests have no visible leaders. In 2014, the Hong Kong Federation of Students (HKFS) — an alliance of the public universities’ student unions — was nominally the protest leader. This was why Carrie Lam, as the then Chief Secretary, organised a public meeting with the HKFS representatives. In 2019, while the million-people marches were organised by the Civil Human Rights Front—a protest organiser with a long history—many other protests were largely self-organised. These self-organised protests are happening every weekend in different districts. “We counted 15 separate protests from the first million-people march on June 9 to July 15, with organisers ranging from local district councillors to a group of Hong Kong mothers.” About the author: Victor Yeung is Admiral’s founding managing partner and chief investment officer. Since 2013, he has been responsible for our overall firm strategy and day-to-day management of our funds. From 2007 to 2013, Victor was with LaSalle Investment Management, where he managed the Asia Pacific portion of the US$10 billion Global Real Estate Securities program and eventually became its Managing Director, Asia Pacific Securities. He writes regular columns for various news media in Hong Kong, Singapore and Taiwan, and he is a co-host of a REIT commentary segment on Hong Kong’s Now TV. He has written one English and three Chinese books on REITs and other real estate topics. The lack of identifiable leaders means that the government does not have a negotiation counterparty. In fact, the university student unions rejected Carrie Lam’s request to meet, on the grounds that the 2019 protest is not a 8 9