The national security law China imposed on Hong Kong this week will damage civil liberties with long jail sentences and grant immunity to Chinese agents working in the territory. For investors who depend on the city as a financial center, though, there may be an extra sting in the tail.
The law could increase self-censorship by Hong Kong’s analysts and economists, and damage the credibility of research reports, the Financial Times reported this week. The need to maintain relationships with mainland clients has influenced coverage in the past, but many fear the new law will exacerbate this trend.
It’s a bit late to be worrying about that, though. Self-censorship isn’t just a matter of avoiding gratuitous digs and glib phrases. If you look at the ratings given by equity analysts in recent years, it seems to include portraying companies with strong mainland connections as better investments than they actually are.