Event

Once more, Hong Kong’s CEO and government leader was chosen by the Election Committee composed of about 1,200 members. Compared to his predecessor Donald Tsang, 57-year old winner Leung Chung-yin will have a weaker mandate. Even though he got 61% of the votes ahead of his main opponent Henry Tang, it is the lowest result for a CEO since Hong Kong was handed back to China in 1997. Beijing, still central in appointing eligible candidates, initially supported Tang but eventually decided to back Leung after the former was embroiled in various scandals.

Impact on country risk

Although the population has no say in electing Hong Kong’s CEO, which affects his legitimacy, it still has some degree of influence. With opinion polls having highlighted limited enthusiasm for all three candidates, it is expected that Leung’s agenda will have to meet business community and population expectations. Economic resilience to the global slowdown, preparing the financing of an ageing society, addressing air pollution, stopping the widening wealth gap and developing social housing are among the main medium-term concerns. The top political issue will obviously be the eventual move towards universal suffrage as mentioned in the Constitution. But serious doubts remain about the likelihood that Beijing will accept a direct election system in 2017 as it has so far only claimed to reject it until at least that date. Therefore, pressures from democratic parties and demonstrations might progressively rise as that deadline approaches in coming years. Moreover, weak overall support for Leung’s mandate means his policy will be closely scrutinised. Nevertheless, these future developments and various challenges are not likely to affect Hong Kong as a haven of stability, attractive business hub and financial centre.

Analyst: Raphaël Cecchi, r.cecchi@credendogroup.com