How Hong Kong is Planning to Make a Comeback in Finance
The economy of Hong Kong has recovered from past crises by reinventing itself through various measures such as creating new regulations, introducing new investment products, and hiring new talent. However, due to the travel restrictions caused by Covid-19, it will take longer to bounce back as it requires many talented individuals to return. According to Sean Debow, CEO of Eurizon Capital Asia, the process of recruiting skilled people worldwide will be slow and different from before.
Even though there are many qualified people from mainland China who want to work in financial services, it will still take time to gather many thousands of talented individuals. Eurizon Capital is a Milan-based asset management firm and is the asset management division of Intesa Sanpaolo, Italy’s biggest banking group, with total assets under management of €392 billion (US$416 billion) as of Q2 2022.
After facing civil unrest since 2019 and strict Covid-19 regulations for three years, Hong Kong has experienced a surge in emigration by both locals and expatriates who are frustrated with pandemic travel restrictions and apprehensive about Beijing’s National Security Law. With the recent lifting of Hong Kong’s mask mandate, which was the city’s last significant Covid-19 restriction, the government is now initiating campaigns to lure financiers, professionals, and businesses to restore its status as a leading international financial center in Asia.
Apart from its talented workforce, Debow mentioned that Hong Kong has other benefits, such as its physical location and connectivity to mainland China, that will help it maintain its position as a financial center. He stated that most of the financial services industry can quickly network with each other because they are located in close proximity. He further added that during the Rugby Sevens matches, about 50% of the financial services leadership in Hong Kong is present at one location. This kind of networking enables Hong Kong to recover from crises more rapidly since people collaborate with their colleagues and rivals in an astute manner.
According to Debow, Hong Kong’s connections with mainland China and global markets are why it can make a comeback. It is no coincidence that individuals residing in Hong Kong have strong connections with people in other cities such as Shanghai and Beijing, including their parents, grandparents, friends, and relatives. These relationships are deeply rooted in familial ties.
Although many countries in Asia, including Singapore, have attempted to replicate this level of connectivity, it is not the same. Singapore is located in a different place and its residents are not considered family members. Hong Kong, on the other hand, is unique in that its deep connections with cities such as New York and London place it in a highly significant circle.
According to Debow, who co-authored the book Rise From Crisis to commemorate the 30th anniversary of the CFA Society Hong Kong, the city has been a destination for non-stop flights from New York for almost two decades, which is a testament to the strong ties between Hong Kong and the rest of the world. While there have been limited non-stop flights to Singapore over the years, the connectivity between Hong Kong and other major cities is unparalleled.
Alvin Ho, President of the CFA Society Hong Kong, stated that Hong Kong is the second-largest private equity center in Asia, managing over US$190 billion in the capital as of June 2022. He also noted that Hong Kong is the largest hedge fund hub in Asia and the region’s largest cross-border financial center.
Furthermore, Ho believes that Hong Kong’s financiers have a crucial role to play in assisting mainland institutional investors. Hong Kong is well-equipped to help Chinese companies expand their reach within the Asia market, not just in Western markets. According to Ho, Hong Kong’s advantage lies in its focus on the international market from day one, rather than just China or Hong Kong.
With the Guangdong-Hong Kong-Macau Greater Bay Area (GBA) development underway, start-ups in the innovation and technology sector require additional private investment capital. According to Ho, with the backing of an international financial center, such as Hong Kong, the GBA should embrace venture and growth investing as a means of moving forward.
Source: scmp
