Hong Kong leader Leung Chun-ying is facing fresh uncertainty over the political support he has from China after his campaign manager and close ally quit the cabinet last month because of a police investigation into his commodities trading business.

People will question whether he really has the ability, confidence of the people to lead

It was the latest in a series of scandals to hit Leung since he took office last July in a move orchestrated by Beijing.

In other embarrassments, his development minister has been arrested, there have been mass public protests against the government and opponents have attempted to impeach him.

Local media said the police investigation of Barry Cheung, the latest scandal, could be the last straw. But the senior mainland Chinese official in charge of Hong Kong affairs made the unusual move last week of denying reports that Beijing was preparing to replace Leung.

“It is certainly damaging to his (Leung’s) political credibility,” said Joseph Wong, a former head of Hong Kong’s civil service, of the scandal.

“The isolation is there... and people will question whether he really has the ability and confidence of the people to lead.”

How Beijing reacts to the scandal will reflect how far Beijing will go in maintaining the “one country, two systems” formula that underpins Hong Kong’s ties with a Communist Party-ruled mainland.

Some analysts say with Leung weakened, and Hong Kong preparing for an annual round of anti-China protests to mark the 1989 Tiananmen Square crackdown, Beijing could move to stamp more authority in the financial hub, which is part of China but has limited autonomy until 2047.

Cheung, Leung’s close ally and friend, resigned from the Cabinet and other official posts 10 days ago. He is now helping police with their inquiries into the failure of the Hong Kong Mercantile Exchange (HKMEx) that he founded and chaired until it closed last month.

Despite prominent shareholders that included the En+ Group of Russian billionaire Oleg Deripaska and the Hong Kong arm of China’s biggest lender, the Industrial and Commercial Bank of China (ICBC), HKMEx’s volume of gold and silver future trades had been thin.

The city’s market regulator, the Securities and Futures Commission, last month warned of “serious irregularities” in the exchange’s operations – sparking police investigations that have led to the arrests of six people.