A pro-democracy rally in Hong Kong on July 1, 2014
HSBC downgraded its investment outlook on Hong Kong, citing fears over a pro-democracy movement in the city but the banking giant later altered its report, severely toning down the emphasis on public unrest.
Discontent in Hong Kong is at its highest level in years, with tens of thousands of people taking to the streets last week demonstrating against Beijing's insistence that it vet candidates before a vote in 2017 for the southern Chinese city's next leader.
The bank's third-quarter global equity report on Monday cut the former British colony's stock market, one of the region's biggest, to "underweight", a rating the it uses to describe underperforming stocks.
"We reduce Hong Kong to underweight on concerns about negative news flow. 'Occupy Central', a campaign for greater democracy, could sour relations with China and may hurt the economy," the report said.
The Occupy Central campaign -- which has been heavily criticised by Beijing -- has pledged to stage a mass sit-in at the main business district, where HSBC's Hong Kong offices are based, unless leaders commit to electoral reforms.
However, HSBC's report was later amended to put an emphasis other economic concerns about the city.
The updated report said the new rating was due to "the risk of weak residential real estate prices, the slowdown in mainland tourist arrivals, the market's link to US interest rates...and weak earnings momentum", before mentioning Occupy.
An HSBC spokesman refused to comment on why it had been changed.
Beijing's state-run media has called Occupy "illegal" and said it could damage the city's economy, while some local business groups -- including several foreign business chambers and international accounting firms -- have run newspaper advertisements opposing it.
But one Occupy organiser said the impact of the sit-in would be temporary.
"What we are pursuing is the long-term transparency and accountability in the government, which is good for the economy," Chan Kin-man told the city's South China Morning Post newspaper. "Investors should not worry as this will be a very peaceful protest."
The Wall Street Journal last month reported that the city's liberal Chinese language newspaper Apple Daily, a regular critic of Beijing, had said HSBC and Standard Chartered pulled advertising in late 2013 after a request by Beijing. Neither bank has confirmed the report.
More than 500 people were arrested when police cleared a sit-in protest in Central, following a major pro-democracy march on July 1 to mark the anniversary of the handover of Hong Kong from Britain to China.
Beijing has promised to let all Hong Kong residents vote for their next leader in 2017 -- currently a 1,200-strong pro-Beijing committee chooses the city's chief executive.
But it says candidates must be approved by a nomination committee, which democracy advocates fear will mean only pro-Beijing figures are allowed to stand.
The city's sovereignty was handed over from Britain to China in 1997 under an arrangement that guarantees the city's people civil liberties, including the right to protests, which are unseen on the mainland.