The eyes of the world’s rugby fans are on the Hong Kong government. They are hoping for the resumption of the Rugby Sevens. The three-day tournament is as famous for its bibulous parties as its match play. Investors are also watching whether the government will reopen borders. Tourism is an important business for Hong Kong.
On Thursday, Hong Kong chief executive Carrie Lam ruled out reopening the border with mainland China in the foreseeable future. The Hong Kong Sevens, which do not depend on this, had already been rescheduled to November. They will probably be cancelled again if the government does not approve the event soon.
The rugby tournament, first held in the city in 1976, attracts over 100,000 tourists from around the world. The event added around $50mn a year to the Hong Kong economy before it was cancelled in 2020 due to the pandemic.
Yet the Sevens make only a modest contribution to a broader tourism trade. At its 2018 peak, 51mn people travelled from mainland China to the city. This group spends a much bigger $18bn a year during their trips.
The city’s benchmark Hang Seng index is down a quarter in the past year. Of the Hong Kong-listed companies, mainland Chinese tech groups such as Tencent and Alibaba have received most of the attention amid crackdowns by Beijing. But the companies focused on the Hong Kong economy are at greater risk.
Hong Kong developers such as Henderson Land and Sun Hung Kai Properties rely on rent from companies that used to cater to mainland Chinese shoppers. MTR, which runs the city’s subways, is also heavily invested in local property development and management. Retailers Wingon, Chow Tai Fook and Lifestyle International are among those directly exposed to the closed border — the latter reported a record loss last year.
Hong Kong’ stance on controlling new infections is looser than China’s. That gap will delay the opening of the border, squeezing an economy which shrank by a worse than expected 4 per cent in the first quarter. Even if the Rugby Sevens resume, they would not provide enough of a boost to relieve the pressure.
If you are a subscriber and would like to receive alerts when Lex articles are published, just click the button “Add to myFT”, which appears at the top of this page above the headline.