Beijing must reassess Hong Kong situation as pro-democracy camp wins big - SCMP

Pro-democracy candidates appear to have made major gains in Hong Kong's District Council elections, as early results trickled in Monday morning, with multiple high-profile pro-government figures losing their seats.

There are mixed feelings over this weekend's results of Sunday’s historic district council elections in Hong Kong. On the one hand, the uptake is positive for risk sentiment as the protesters have a positive result with this, a '1-up' over the elite, so it may calm protests in the near term. On the other hand, however, it may antagonise the central governments and only time will tell how they will respond – For sure, the US administration is watching very closely. 

The South China Morning Post wrote that 'it should set alarm bells ringing in Beijing and among local government officials, analysts said."

"While the central government earlier urged Hong Kong officials to proceed with the elections after more than five months of anti-government protests and was prepared for a harsh outcome, now it may have to wrestle with changing course in its handling of the city,"

the article went on to say. 

Key notes

• "Former secretary for transport and housing Anthony Cheung Bing-leung said Beijing would have to rethink its approach to ending the mayhem in the city as the pro-establishment camp got a drubbing."
• "One avenue is to seriously consider options, such as holding an inquiry into all aspects of the fallout from the unrest, triggered by a now-withdrawn extradition bill."
• "He said both the pro-democracy and pro-establishment camps viewed this year’s district council elections as a political battle, not the usual contest over livelihood issues."
• "Beijing would have to decide whether to sack Chief Executive Carrie Lam Cheng Yuet-ngor."
• "The stunning turnout and results showed the determination of Hong Kong people of different political persuasions to have their voice heard."
•  
• "The citywide polls were widely viewed as a barometer of support for the protest movement and the government."
• "Beijing would see the need to adjust its policies in the wake of Sunday’s election results, and appointing a commission of inquiry was a feasible option to address the demands of Hong Kong people."
• "At a meeting with 500 Beijing loyalists in Shenzhen in August, Zhang Xiaoming, the director of the Hong Kong and Macau Affairs Office, left open the possibility of setting up a commission of inquiry after order was restored."

FX implications: 

• Chart of the week in Analysis: AUD/JPY at a critical juncture