Preparing for the paradigm shift

Hong Kong and Taiwan

Politics and economics in

China’s shadow

Friction with mainland China for both Hong Kong and Taiwan is set to continue but

will be mitigated by vital economic ties. Hong Kong’s capital markets are faring

well and the territory now occupies the top spot for foreign-exchange trading in

Asia, but renminbi depreciation and weakening external demand from mainland

markets represent key headwinds.

HONG KONG

Carrie Lam, Hong Kong’s former chief secretary for administration, looks set to be

chosen as the special administrative region’s next chief executive on March 26th,

succeeding the highly unpopular current leader, Leung Chun-ying. Elections for the

Legislative Council (Legco, Hong Kong’s parliament) in September 2016 produced

an opposition increasingly dominated by populist “localist” groups advocating

greater self-determination or even independence. Although pro-government parties

will dominate Legco until the next ballot in 2020, government moves to bar radical

opposition members from the legislature risk undermining the body’s legitimacy.

Rob Koepp

Director, Corporate Network,

Renminbi deposits in Hong Kong Hong Kong

(Rmb bn)

Sources: The Economist Intelligence Unit; Hong kong Monetary Authority; Haver Analytics.

Jan

14

Jan

15

Jan

16

Jul Jul Jul Jul

1,

600

1,

800

400

200

HKEX to launch

renminbi currency

options in 2017

JUl
2013