Hong Kong police clear the area following a standoff with protesters gathered outside the Mongkok police station in Hong Kong on October 7 2019. Picture: AFP/MOHD RASFAN
Hong Kong police clear the area following a standoff with protesters gathered outside the Mongkok police station in Hong Kong on October 7 2019. Picture: AFP/MOHD RASFAN

New York/Hong Kong — Inside, the rich spent millions on art and fine wine. Outside, teargas filled the streets, as an anxious Hong Kong was again engulfed by protests.

Those two scenes — the first, at an art auction inside the city’s modernistic convention centre, the second, in the neon-lit roads of the nearby Wan Chai district — seemed to capture the dissonance that has become the new normal for Hong Kong.

Week after week, as protesters have clashed with police, the city’s wealthy have largely carried on. While property values and stock prices have dipped, the 10 richest tycoons who derive their fortunes from Hong Kong are still worth $197bn, just 4% less than when the protests started in mid-June, according to the Bloomberg billionaires index.

Judging by the turnout at the five-day auction by Sotheby’s — and the prices art and wine have commanded — elites from Hong Kong and the rest of Asia are as keen as ever to open their pocketbooks.

The highlight of Sunday’s contemporary art auction was a new world record for Japanese artist Yoshitomo Nara, whose painting of a cute but menacing cartoon girl — Knife Behind Back — sold for $24.9m. On Saturday, Sotheby’s auctioned a canvas by Chinese émigré artist Sanyu for $25.2m, with four bidders pushing the painting of a nude female above its $19m  target.

The event includes 20 live auctions that are expected to fetch more than $336m. On Tuesday, the auction hall for Chinese antiques was packed as a rare pouch-shaped glass vase from the Qing dynasty sold for $22.95m. 

The contrast with chaos on the streets in recent days — in some cases just a short walk from the convention centre — was striking. In Wan Chai on Sunday, police fired teargas at demonstrators who had gathered in a park and vandalised nearby bank branches. In another part of the city, Sham Shui Po, video footage showed a bloodied taxi driver who was dragged out of his car and stomped on by a group of protesters after the vehicle hit some of them.

It was one of the most violent weekends since anti-China protests kicked into high gear in June, with demonstrators paralysing swathes of the financial hub after the government imposed emergency rule to ban face masks. While protests on Monday failed to gain traction, there is little sign of a retreat by hard-core demonstrators who have grown violent.

The unrest has turned parts of Hong Kong into battle zones on weekends and holidays, wreaked havoc on the tourism industry and sent the $360bn economy hurtling towards recession.

But so far at least, wealthy enclaves such as the Peak and Repulse Bay have been unaffected by the violence. What’s more, many big companies have found ways to sidestep transport disruptions and pockets of unrest, including financial firms that generate a large number of the city’s millionaires.

UBS Group, the Swiss financial giant, went ahead with a planned board meeting and gathering for clients in Hong Kong in September despite the protests, flying in CEO Sergio Ermotti for the occasion. The city has hosted about $17bn of initial public offerings in 2019, including a blockbuster $5bn listing by Budweiser Brewing in September.

Of course, the question looming over Hong Kong is whether its role as one of the world’s premier financial and commercial hubs can continue if the protesters and the government fail to reach common ground. As much as $4bn of deposits has already flowed out of Hong Kong’s banking system to Singapore, according to an estimate from Goldman Sachs.

Hong Kong’s uber-rich also risk coming under pressure from China’s government, which has linked them to the rising inequality it blames for the social unrest. The ruling Communist Party’s mouthpiece, the People’s Daily, has said that Hong Kong authorities should take away land from developers through compulsory acquisition.

It’s a threat that some tycoons appear to be taking seriously. On October 4 the Li Ka-shing Foundation, funded by Hong Kong’s richest man, said it would disperse HK$1bn ($127m) to help small and medium firms weather the “unprecedented challenges” facing the city’s economy.

The move came just a few days after New World Development, controlled by billionaire Henry Cheng, said it would donate land to help with the city’s housing crisis.

It’s unclear whether the billionaires placed any bids at Sotheby’s this week.

Bloomberg