Decisive action is necessary to reignite the city's economy

Over recent months we have witnessed extreme volatility in global stock markets and this looks likely to continue unabated. The correlation between the market highs or lows rarely seems to have anything to do with the health and prosperity of many of the companies listed, but is more related to sound bites and media spin, rather than in-depth market research and hard analysis.

Hong Kong's stock market has experienced similar volatility with a surge in July as new investors entered the public markets via Stock Connect, the mechanism that allows Chinese mainland investors to trade stocks in Hong Kong, Shanghai or Shenzhen using their local trading and clearing facilities. This was followed by a swift decline, but the prospect of a concurrent listing in Shanghai and Hong Kong for Ant Group will be interesting to follow as the initial public offering could be one of the biggest ever.

There have been noticeable market losers since the advent of COVID-19, particularly those with significant interests in travel, tourism or segments of retail such as luxury goods which have pretty much ground to a halt the world over. On the other hand, certain entertainment, technology and pharmaceutical stocks have experienced massive increases in value but yet again, these often seem to be based on perceptions and possibilities, rather than tangible results or meaningful forecasts.

Unfortunately, much of the related market activity is meaningless for the majority of middle- and lower-income families in Hong Kong who receive little or no benefit as a result. They are experiencing more severe hardship than ever before and are desperately looking for real signs of economic revival that will benefit them at the most basic level. Many of these people need adequate short-term financial support but more importantly need to believe that job creation is high on the government's economic agenda. The general consensus is that there is much to be done to address the many issues that these Hong Kong people are facing.

With unemployment figures reaching a 15-year high of around 6 percent and a seemingly steady decrease in the range of job opportunities, particularly those with salaries that begin to reflect the high cost of living here, the prospects are looking pretty bleak with a full-scale economic depression looming on the horizon.

The effects and severity of the global economic downturn are having a devastating effect on the local economy. This is compounded by the disintegration of some of the mechanisms that have historically supported free trade and globalization. We are living in an era of ever-increasing trade tensions and geopolitical conflicts which are occurring at the expense of the broader economic prosperity of the global community.

Much of the antagonism has stemmed from Washington, which continues to take a more isolated stance and is becoming increasingly distanced from hard-earned commitments and international relationships forged over decades. The process of decoupling from many historic partnerships is well underway, ranging from the Paris Agreement on mitigating climate change to more recent announcements on withdrawal from the World Health Organization. The "America First" model has had serious ramifications and increasingly other governments are combating through similar or reciprocal measures as the international community becomes further embroiled in conflict. Technology, trade, currencies and border issues seem to be the tipping points for further escalation of global tensions with rational dialogue and engagement being in short supply.

The recent closure of the Chinese Consulate General in Houston has resulted in the closure of the US Consulate General in Chengdu in reciprocal action. The negative consequences affect stability and connectivity throughout international markets and supply chains with the economic reverberations being felt strongly in Hong Kong.

For many years the city benefited from being the essential gateway to the Chinese mainland market. But for almost two decades that role has been diminishing as many restrictions or obstacles were reduced or removed, enabling a freer flow of trade in goods and services. In the process, Hong Kong developed into a leading international financial center with the economy driven by the insatiable appetite of increasingly conspicuous mainland consumers in retail, tourism and property. Unfortunately alternative and/or sustainable economic drivers were overlooked by respective administrations, leaving Hong Kong less prepared for the challenges that lie ahead than many of our economic neighbors.

COVID-19 has unfortunately leveled the playing field as most of our regional neighbors continue to suffer. However there is a sense that when the "new normal" becomes evident, others are better prepared to reestablish vibrant economic development. We could be left in a state of stagnation, wondering why, for example, the retail and tourism sectors may no longer be the economic powerhouses they once were.

So what is going to drive the Hong Kong economy over the coming decades and why have we not seen the need to create a higher value-added economy underpinned by high-tech or the need to seriously invest in local people and companies to compete or work alongside neighboring cities in the Guangdong-Hong Kong-Macao Greater Bay Area, all of which seem to be moving up a gear?

We are at the tipping point and more than ever need visionary leadership alongside a comprehensive program to reinvent and reignite the economy. There is no simple or short-term solution, but two decades of focusing on retail and tourism holds little prospect for the future. We need to move away from the traditional drivers in favor of moving up the value curve.

Hong Kong has a history of reinventing itself and prospering as a result. We are at a pivotal moment in history. Never has it been more important to acknowledge a vibrant past, embrace the future and retain a relevant, dignified and leading position on the global stage.