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By Carl Delfeld of Chartwell ETF and Chartwell Partners Asset Management
Keith Bradsher of the New York Times reports that Beijing will send most of China’s gold medalists to Hong Kong next week, ahead of key September 7th legislative elections. The athletes’ visit, announced Wednesday by the Hong Kong government, comes as democracy advocates here are struggling to hold on to their 26 seats in the 60-member Legislature.
A surging Chinese national pride has helped pro-Beijing candidates rise in the polls this summer. If pro-democracy politicians fall below 21 seats, then the Chinese government’s allies will be in position to reshape election laws and other legislation in ways that would sharply increase Beijing’s control.
Meanwhile, Chinese authorities arrested five Americans on Tuesday after they spelled out “Free Tibet” with blue lights near the National Stadium. Three other people, including a New York artist who fashions giant displays with lasers on buildings, were detained for a separate protest.
Advocates of democracy consistently win a majority of votes cast by the general public in legislative elections. But a complex electoral system, introduced by the British to limit pressures for local rule and preserved since 1997 by China, has ensured that a legislative majority remains in the hands of a coalition of the pro-Beijing business elite and pro-Beijing labor and community activists.
Unfortunately, the pro-democracy camp has split into a series of rival parties all battling for the same voters, including seven pro-democracy tickets on Hong Kong Island alone. But the pro-Beijing camp has also divided, with the Federation of Trade Unions distancing itself from the Democratic Alliance.
Despie Hong Kongs stunning growth over the years and well-deserved status as the freeest economy in the world, poverty and income inequality have unexpectedly emerged as the top issues in campaign forums. High food and energy prices have pushed up inflation to 6.1% in the 12 months through June, hurting the poor in particular.
There are two ETFs that track Hong Kong's market. The iShares MSCI Hong Kong (EWH) and the NETS Hang Seng (HKG) ETF.
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