November 2014

OPINION: Nothing’s as certain as uncertainty

Fiona RintoulOn November 9 it will be 25 years since the Berlin Wall fell. The Wall’s collapse was preceded by a couple of months of popular unrest in East Germany. The epicentre was Leipzig, where, on October 9, 1989, a month before the Wall was finally torn down, 70,000 demonstrators faced down a massive, heavily armed security presence to march peacefully through their city centre in one of the most impressive displays of civil courage seen in Europe since the war. I hear that a former Chancellor of Germany, Helmut Kohl, is making out the Wall’s eventual collapse had nothing to do with these people. I disagree. That night in Leipzig the people looked into the eyes of the East German regime and saw it for the paper tiger it always was. They lost their fear, and the rest, as they say, is history.  Back then I worked for a publisher of academic journals and so I paid no mind
to how professional investors reacted to this event. I hope they were pleased. But, to be frank, I wouldn’t be at all surprised if they weren’t. Because it probably created a bit
of uncertainty.  Now, 25 years later, the Occupy Central movement in Hong Kong is trying to do for Hong Kong what the people of Leipzig did for East Germany.  The German president, Joachim Gauck, himself an East German pastor who was involved in the pro-democracy movement, acknowledged their courage at this year’s 25th anniversary commemoration of the October 9 demonstration.   Speaking in Leipzig, he emphasised the importance of defending democracy even today. “The young protesters in Hong Kong have understood this very well,” said Gauck. The financial community in Hong Kong, by contrast, is anxious for the protesters to put a sock in it. So anxious that the Hong Kong affiliates of the big four – EY, PwC, Deloitte and KPMG – published a half-page advert in the Chinese press voicing their concerns about the Occupy Central movement.  “We worry that multinational companies and investors might consider moving their regional headquarters from Hong Kong, or even remove their businesses, in the long term shaking Hong Kong from its position as an international financial and commercial centre,” the firms wrote.   I can see that could be a worry. But isn’t it a bit of a worry that the Chinese authorities are playing fast and loose with the people of Hong Kong’s democratic rights – to say nothing of the democratic rights of the mainland Chinese? WIDER COMMUNITY
Meanwhile, writing at the beginning of September, Guy Foster, group head of research at Brewin Dolphin, said: “There is no obvious trigger to the end of the Occupy Central campaign and spreading pro-democracy protests in Hong Kong. Instead the best outcome would be for it to dissipate gradually as protestors [sic] lose interest.” Really? That’s the best we can hope for? That they lose interest and go home so our investments don’t get disrupted?  This is not good enough. The financial community is part of the wider community. It needs to show a bit of support for these people, who, after all, only want to improve their country.  In any case, uncertainty is part of life. In fact, life is uncertainty. Trying to avoid it is like trying to herd cats. Futile. And dangerous. As Stephen Ford, head of investment management at Brewin Dolphin, has remarked elsewhere, “Being scared to invest can be the riskiest strategy of all.”  Running scared of political change because it creates uncertainty in the short term is riskier still. ©2014 funds europe

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