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HONG KONG (Reuters) - China's new security laws for Hong Kong will punish crimes of secession, subversion, terrorism and collusion with foreign forces with up to life in prison, heralding a more authoritarian era for the Asian financial hub.

The laws came into effect on Wednesday, 23 years after Hong Kong returned to Chinese rule, with many in the city fearing the legislation will crush wide-ranging freedoms promised to Hong Kong under a "one country, two systems" formula for governance.

Here's what financial analysts are saying about the legislation:


"We have also seen plenty of money being poured into Hong Kong, especially in the secondary listings of big Chinese companies - especially over the last year though the law-and-order situation remains an issue. As long as money can be made, opportunities for wealth creation remain strong. Nothing pulls people more than if they can make money. So while there’s plenty of uncertainty in terms of what this new security law entails, the money appeal remains a key magnet and Hong Kong will continue to see those flows of IPOs."


"For a few years, geopolitical factors have created market volatility and have generally been negative for sentiment. This latest development is another move in a long game for China. It brings higher risks for companies operating in the region, however it has been well-flagged and is arguably already priced in."


"Markets may be looking at it more from a humanitarian perspective, but not really from a financial one. At the end of the day, the Chinese also want the Hong Kong capital market to flourish. It is not something I am going to trade on so much."


"The laws, combined with the change in Hong Kong’s status from the U.S., is another development in the U.S. and China cold war that has been going on for a long time. It has not taken people by surprise but it’s an unwelcome development. It’s one of a number of geopolitical factors which is a negative for some asset classes now.”


“Markets have been well prepared for these laws, it’s not unexpected because it has been well flagged by Beijing. Hong Kong stocks have been trading at a significant valuation discount for some time. The price to earnings ratio of the Hang Seng Index is 11 times, that is very low compared to markets around the region so stocks in Hong Kong have been at a discount. The laws are not a positive for the outlook of Hong Kong stocks, there’s been a sense of inevitability about this.”


"The China law is just a formality. We knew China was going to pass the law and the U.S. has already taken some action against Hong Kong. There was some interesting work from the Peterson Institute on this. If Hong Kong would be subject to the same tariffs as China, what would that mean? The conclusion is that because Hong Kong specializes in financial services and logistics, that it won't be affected that much by the tariffs. I agree with that. The law is merely symbolic. For the United States, this means that tensions in China and with China will persist well after the U.S. elections."


"With the release of the full detail of the law, it should be clear to those in any doubt that this is not the Hong Kong they grew up in. But this tighter security environment has been on the way for many years now. The difference is that U.S. and China relations are far worse and this could be used as a pretext to impede the role of Hong Kong as a finance hub."

(Reporting By Scott Murdoch in Hong Kong, Shriya Ramakrishnan in Bengaluru and Anshuman Daga in Singapore; Editing by Michael Perry, Robert Birsel)

Copyright 2020 Thomson Reuters.

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TikTok pulls out of Hong Kong due to new security law

TikTok says it will stop offering its social video app in Hong Kong after the region adopted a new national security law granting expanded powers to the mainland Chinese government. “In light of recent events, we’ve decided to stop operations of the TikTok app in Hong Kong,” a spokesperson tells Axios.

Global tech companies operating in Hong Kong have expressed concern that the new law could force them to comply with China’s draconian censorship standards and possibly send user data to the mainland. Google, Facebook, and Twitter have already stopped processing requests for user data from the Hong Kong government.

TikTok is owned by ByteDance, a major Chinese internet company. But it has been at pains to differentiate the Western app from its parent and Douyin, the Chinese version of the platform. While TikTok has long argued that it never shares data with the Chinese government, the new Hong Kong law would likely have undermined the company’s case if it continued to operate in the region.

TikTok continues to face scrutiny in the US and beyond. Tonight, Secretary of State Mike Pompeo told Fox that the government is “certainly looking at” banning TikTok and various other Chinese social media apps. TikTok was also banned in India last week alongside dozens of other Chinese apps amid increased tensions between the countries.

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