The months-long protests in Hong Kong could come to an end soon, according to strategist David Roche, who said they will “be settled or crushed” before October 1 — the 70th anniversary of China’s National Day, CNBC reports.
The way China responds to the situation in the city is crucial in determining how markets and U.S.-China trade talks will be affected, he told CNBC on Friday.
In fact, the politics go hand in hand with the Chinese economy, Roche said.
“I don’t accept this will be a small scale problem in a larger China economy. The reason I don’t is because I believe any intervention (from Beijing) to Hong Kong will be immediately, umbilically, linked to what happens to trade talks and international relations globally,” said Roche, who is president at research and investment consulting firm Independent Strategy.
Roche said “Beijing has to weigh in on two things: the political and economic cause.”
On Thursday, Hong Kong’s government announced that it has lowered its 2019 GDP growth forecast to between 0% and 1%, from the original range of 2% to 3%.
The protests over an extradition bill have spilled over into issues of freedoms and democracy, are almost into their third month, and have crippled the Asian financial hub.
Various sectors have reportedly been affected, and markets are said to be hit hard as demonstrations turn increasingly violent. Most notably, the airline, retail, real estate sectors have seen their sales decline, while the city’s public transit system has also been disrupted on multiple occasions.
Ray Dalio, founder of investment firm Bridgewater Associates, said that the protests have “gone beyond a demonstration,” and has become “a revolution in Hong Kong.”
“It’s disruptive, and has global geopolitical implications,” he told CNBC’s Christine Tan on “Managing Asia.”
However, the situation would only be a “medium-sized risk” for China’s economy, Dalio said, pegging the risk level at a 3 or 4, on a scale of one to 10. From a larger perspective, Hong Kong is just a “tiny place” in a “very big vibrant economy” that is China.