Hong Kong's city leader Carrie Lam announced on 27 January that the 21-day quarantine period most arrivals face, one of the world's most stringent timelines, would be cut to two weeks because the increasingly dominant Omicron variant has a shorter incubation period.

This move to relax the rules comes against the backdrop of international businesses sounding alarm bells of a talent drain as rival financial hubs are reopening.

In a draft report obtained this week by Bloomberg News, the European Chamber of Commerce warned businesses that the city could remain internationally isolated until 2024.

"We anticipate an exodus of foreigners, probably the largest that Hong Kong has ever seen, and one of the largest in absolute terms from any city in the region," the draft report said.

The Financial Times reported this week that Bank of America is the latest blue-chip firm to examine relocating staff to Singapore.

Lam said in a broadcast to the Hong Kong people that she "had read firsthand a lot of reports about the business community's strong reactions to the very stringent rules imposed by Hong Kong arrivals".

She continued: "But on this occasion, the revision from 21 days hotel quarantine, to 14 days hotel quarantine plus seven day self-monitoring is not because of pressure from anybody.

"It's just because of science. The science of Omicron tells us that only Covid has a relatively short incubation period. I think the median duration of an Omicron infection is only four to five days. So 14 days quarantine will be good enough according to my experts.

She added that the seven day or no day quarantine in some countries of Europe was not right for Hong Kong.

"For Hong Kong. That's a very dangerous move. Because I have said many times we do not possess the prerequisites for living with a virus because the vaccination rate is not good, especially amongst the elderly."

The surprise move came after multiple recent outbreaks forced the reimposition of economically painful social-distancing measures and saw thousands of residents in one district confined to their homes.

One large cluster of cases in crowded public housing blocks was traced to a 43-year-old woman from Pakistan who was infected in one of the city's 40 designated quarantine hotels during the latter stage of her stay.