Recognising the impact of Covid-19 on its financial status, Hong Kong has reverted back to more lenient travel restrictions to improve life for both residents and travelers.
David Brown HONG KONG’S COVID CHANGE OF COURSE:
April 1 end to flight ban from U.S., U.K., Australia, Canada, France, India, Pakistan, Nepal, and the Philippines
The mandatory quarantine period has been reduced from 14 days to 7
Hong Kong health officials said that they’ll put plans for a Covid mass testing on hold. They’ll consider it again at the right moment.
Hong Kong will stop categorizing parts of the world as “high-risk” or “low-risk”
Most social-distancing measures will be gradually eased from April 21, including allowing dining-in at restaurants after 6 p.m. and up to four people in a gathering for the first phase of reopening.
Schools will resume with in-person classes on Monday, following the Easter holiday.
Hong Kong’s borders have been effectively closed since 2020 and there are very few flights able to land. This has had a huge impact on global trade, making it difficult for most people to access the international hub city.
The relaxing of restrictions was likely prompted by frustration in the banking community, who have had to endure border restrictions and quarantine measures for more than two years. While these measures have slowed the spread of the virus, it has still eventually spread and the economy and trading-hub status of the country is at risk.
China has just announced a new policy of opening up an economy that is being hurt by a rigid version of Covid Zero. President Xi Jinping made the announcement last week, which offers business new hope.
Hong Kong’s long-lasting three-week mandatory quarantines for incoming travelers have been a source of grievance and have led to departures of ex-pat staff from some major banks.
Leader Carrie Lam said the quarantine period will be cut to 7 days and outright bans on flights from the U.S., U.K., Canada and six other countries once deemed “high risk” for the virus were scrapped.
Hong Kong was virtually virus-free for much of the pandemic because its border curbs and quarantines largely prevented it from being affected by the virus. However, with a more contagious omicron variant, this changed quickly and Hong Kong became drastically ill-prepared for a widespread domestic outbreak.
Hong Kong now has the highest Covid death rate in the world, with hundreds of under-vaccinated seniors and care-home residents felled by the virus. This is reminiscent of what happened in other countries such as Italy and the United States during the first year of the global pandemic.
Draconian restrictions on tourism have been relaxed finally however pessimism continues surrounding the city’s economic outlook into the future.
In February, the Hong Kong dollar remained stable against the USD but dipped slightly towards month-end. Government measures supported the property market amidst economic challenges. Future strength depends on local economic recovery and Fed’s stance.
The Hong Kong dollar held its strength well in February, only down by less than 0.2% against the USD. It fell to a 4-month low near month end, but the USDHKD pair remained under 7.83 level.
In February, local government released some significant measures to support its property market such as scrapping additional stamp duty for non-permanent residents and easing mortgage lending rules. Against the backdrop of slowing economy where inflation has dropped to sub 2% level (from 2.4% to 1.7%), Q4 GDP q/q was only 0.4%, and PMI remained under 50, these measures were welcomed by the market.
However, the HKD did show a downward trend against the USD despite of the support from still elevated Hong Kong Interbank O Rate (HIBOR) rates and rising local stock market, hence whether the local economy can see some signs of bounce back would be one of the main factors that may affect HKD strength in March. But the HKD is unlikely to be under more pressure should the Fed deliver a relatively dovish stance for future interest rate path.
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