International and regional business leaders from more than 100 financial institutions wrapped up a three-day summit in Hong Kong on Thursday in what was widely seen as a signal that the territory is back to business after recently lifting some of the world’s strictest COVID-19 restrictions.
Organized by the city’s de facto central bank, the Hong Kong Monetary Authority, the gathering of more than 200 financial leaders was the largest the city has seen in nearly three years.
Consistently ranked as the world’s third-leading financial center behind New York and London, Hong Kong has been battered by social unrest, its self-imposed isolation from COVID-19 and reputational damage from a crackdown on dissent. Now he hopes to return.
“We were, we are and we will remain one of the leading financial centers in the world. And you can take that to the bank,” Hong Kong Chief Executive John Lee told an investment meeting of global financial leaders this week.
Some US lawmakers, including Reps. Chris Smith, a senior member of the House Foreign Affairs Committee, Blaine Luetkemeier and Lance Gooden, asked big bank executives to reconsider their presence at the conference, saying their presence would legitimize pressure on China on the city.
Four senior executives did not show up for the meeting. The CEO of Capital Group Co. Timothy Armor cited health reasons. The president of Blackstone Inc. Jonathan Gray and CEO of Citigroup Inc. Jane Fraser have tested positive for COVID and Barclays Plc. CEO CS Venkatakrishnan canceled due to a schedule conflict.
Most of the other participants, including the chairmen of Goldman Sachs, Morgan Stanley and UBS Group, came, with some expressing confidence in Hong Kong.
China enacted the National Security Law in 2020 in response to widespread, often disruptive and sometimes violent protests in 2019 in Hong Kong against a bill aimed at extraditing economic criminals to the mainland. After the law was passed, media outlets supporting the protesters were shut down and some of their staff, as well as protesters and others, were arrested on charges of secession, subversion, terrorism or collusion with foreign powers.
The arrests have raised concerns that the city is being controlled by Beijing, but Lee and the government have insisted that the “One Country, Two Systems” formula that has supposedly governed the former British colony since it returned to Chinese rule in 1997, still in force adhere to.
Lee said in his speech that “the worst is behind us.” He said Hong Kong had regained stability and highlighted the city’s uniqueness: its proximity and seamless connection to the mainland, “which provides Hong Kong with advantages available to no other economy”.
Lee also pointed to government policies aimed at boosting Hong Kong’s competitiveness, including a plan to use fiscal reserves to guide economic development, a $3.8 billion fund to attract businesses through joint investment and a plan to attract talent , including by granting visas to graduates of the world’s 100 best universities.
On the way back?
Experts say it needs to do more or risk being overshadowed by Singapore.
They say the government must first lift all COVID-19 restrictions, including the current 0+3 policy, which no longer requires hotel quarantine but still expects visitors to avoid restaurants for the first three days after arrival. If they test positive, they must be quarantined for seven days.
“When I talk to key financial markets, Singapore, the UK, the US, they’ve already got rid of all those requirements. Hong Kong is something of an emergency,” said Sally Wong, chief executive of the Hong Kong Investment Funds Association.
“Although we claim to be a super link connecting China and the rest of the world, we cannot live up to that reputation,” she said.
A survey conducted in July by its association found that 35% of responding member fund management companies had moved some or all of their regional or global posts from Hong Kong to other offices, in part because of the anti-Covid-19 policies.
China should also allow Hong Kong residents to enter the mainland without having to quarantine, analysts said.
“Hong Kong cannot return independent from China; this is not possible. His business comes from China,” said Andy Xie, a Shanghai-based independent economist. “The real start is when China comes out of ‘zero COVID’ then we can talk about something else.”
While there are many cross-border setups aimed at allowing mainland Chinese investors to invest in overseas markets via Hong Kong and vice versa, strict requirements need to be eased to make these services a reality, Wong said.
“Currently, the key investments in the mainland are the stock market and the property market; the choice of investments is very limited and oriented towards the domestic market. As the middle class grows, there is a growing need to manage diversified portfolios,” Wong said. “Hong Kong is definitely a key gateway to tapping into that potential.”
Despite the departure of about 1.5% of Hong Kong’s population, 98.5% of people remain and the city continues to see people from mainland China and young professionals from elsewhere move to Hong Kong.
Watching TV news coverage of the meeting, Hong Kong hairdresser Fang Du said holding the conference was a good idea, but the worst might not be over for Hong Kong. The territory has seen three consecutive quarters of negative growth this year, with the economy shrinking 4.5% in the third quarter. Like many residents, she hopes the situation in Hong Kong will improve soon.
“Everyone wants their country to do better. … I am confident in the future of Hong Kong,” Du said.
Combining business with entertainment, the Hong Kong Sevens, an annual international rugby tournament, opened this Friday, for the first time since the impact of COVID.
As he encouraged financial executives to enjoy the Sevens, Lee made one final knock on the door with his message to them.
“Opportunity and timing, right here, right now in Hong Kong,” Lee said. “This is the moment you’ve been waiting for. Do it. Be in front, not behind.