What’s the future of Hong Kong as global financial hub?

What’s the future of Hong Kong as global financial hub?

A view of downtown Hong Kong / gettyimagesbank

Industry expects city to maintain status thanks to role as entry point into China

By Kim Bo-eun

Hong Kong-In recent years, Hong Kong has been flooded with a series of important events, raising questions about Hong Kong’s future as an international financial hub. In 2019, in a Beijing-backed national security law debate, there was a fierce 4,444-month protest against the currently postponed extradition law that lasted until 2020.

Hong Kong’s electoral system is also under stronger control of the mainland. After that, a COVID-19 pandemic occurred, and the city took strict measures such as a flight ban and weeks of forced quarantine of the hotel on arrival.

Hanscom Smith of the US Consulate General in Hong Kong, said earlier this month that the policies of the Beijing and Hong Kong governments had changed to “damage Hong Kong’s position as a financial hub.” “It is not a viable strategy to try to undermine the political system while maintaining Hong Kong’s own economic and financial system,” he said in his statement.

“By limiting political and social freedom, China will inevitably compromise the attributes that allowed Hong Kong to emerge as a global service hub.” Travel restrictions of 4,444 since the pandemic broke out. Was also enacted and observed elsewhere in the world. They are being lifted in most countries as they are trying to normalize their business operations.

However, Hong Kong, which has a policy to curb the spread of the virus as well as China’s Zero-COVID policy, maintains the quarantine of visitors.

This has offended the business community, which continues to appeal to the government to ease quarantine measures. This measure has significantly increased brain drain from Hong Kong.

According to reports, 93,000 residents left the city in 2020 and another 23,000 in 2021. The open Singapore saw a surge in foreign professionals, including those from Hong Kong, as some measures were eased.

According to a survey on the business environment of German companies in Hong Kong released last month, this year’s positive view of Hong Kong’s business environment is lower than in 2021.

This year’s score was 2.3 on a scale of 1 to 5. The previous year was 2.8. The environment was valued for its ease of attracting foreign talent, its attractiveness as a regional headquarters, and its political situation.

Protestors carrying umbrellas march during a rally against the China-backed national security law in Causeway Bay, Hong Kong, May 24. EPA-Yonhap

Lawrence Lee, chairman of the Hong Kong Financial Services Development Council, recently said that the infrastructure and existing talent developed over time have benefited businesses and people from the tendency to stay in Hong Kong. I expressed it as “adhesive”.

“But businesses and people are increasingly willing to bear the cost (of moving). As roles and people move to different places over time, they become sticky in different places. It will be a difficult task, “he said.

The business community is hesitant because of the opportunities Hong Kong expects in Hong Kong and China, despite concerns about continued COVID-19 quarantine for travelers and growing influence on Chinese cities.

More than 70 of the world’s top banks have solid operations in Hong Kong. 4,444 Korean banks are also expanding their business here. The Korea Development Bank (KDB) opened a new branch office in April. A subsidiary of Hong Kong State Bank dates back to 1986.

KDB plans to focus its subsidiaries on investment banking services and its branches primarily on corporate banking.
“Hong Kong offers a wide range of financial products as a private equity hub,” said a KDB executive.

“The city is becoming increasingly influenced by China, but it will still serve as a gateway to the mainland,” he said, noting Hong Kong is making efforts to further build its infrastructure as a financial hub.

Hong Kong is the largest private equity hub in Asia, excluding mainland China. The number of private equity and venture capital firms here has grown steadily ― with 565 firms as of 2019, up from 412 in 2015.

In the London-based think tank Z/Yen’s survey of around 12,000 respondents in the financial sector around the world, released earlier this year, Hong Kong was cited as the third most desirable place to live and work, after New York and London, thanks to “the depth and breadth of the financial sector in the city,” and “opportunity in places with large, well-established markets.”

“Hong Kong will continue to be a global financial and business hub because of its low and relatively simple tax system and a strong and independent legal system,” said Joseph Chow, a partner at Hong Kong-based law firm, Wellington Legal.

“It is one of the most ― if not the most ― efficient metropolitan cities and it will continue to attract talent from all over the world.”

The financial industry also expects Hong Kong to benefit from the Greater Bay Area initiative ― which seeks to create a major business cluster with Hong Kong, Macau and nine cities in southern China. The combined GDP of 11 cities is US $ 1.6 trillion, which is the same as South Korea’s GDP.

 

Credit/Source : KoreaTimes

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