There was more dour data out of Hong Kong on Tuesday.
The city’s exports fell 9.2% in October, worse than expected (consensus was looking for an 8.4% drop), while imports fell 11.5% during the month.
Exports have now declined for a dozen consecutive months.
The malaise is, of course, attributable to rampant uncertainty, fostered in part by Donald Trump’s trade war.
Indeed, the government specifically blames Trump. “Hong Kong’s merchandise export performance will likely stay weak in the near term, as soft global economic growth and uncertainties stemming from US trade policies continue to dampen external demand“, a government spokesman said Tuesday.
Hong Kong is obviously mired in recession amid six months of violent protests. The economy contracted 3.2% in the third quarter, and the local PMI is in the 30s.
District council elections over the weekend showed just how disaffected voters are with Carrie Lam. Pro-democracy candidates all but swept the 452 contested seats, a result widely viewed as a sharp rebuke of Beijing.
The world is still waiting to find out how the White House plans to deal with bipartisan, bicameral legislation aimed at supporting the protesters. “We have to stand with Hong Kong, but I’m also standing with President Xi”, Trump told Fox late last week. “He’s a friend of mine, he’s an incredible guy”.
Read more: On Hong Kong, Trump Irritates Everyone
For markets, the concern is that the Hong Kong situation could derail the fragile trade talks at a critical juncture.
Beijing has variously accused the US of meddling in its “internal” affairs and Trump is acutely aware of the possibility that pushing the envelope too far with Xi might risk deep-sixing the tenuous interim deal.
