Several global asset managers in Hong Kong are avoiding hiring local youngsters out of political-related concerns, a move that some market participants believe will prove short-sighted and potentially damage the city’s image as an international financial centre.
Senior executives at an asset owner, a joint-venture fund firm and other industry executives told AsianInvestor that not only some Chinese firms, but also global ones, are reluctant to recruit young university graduates in the wake of the protests triggered by the anti-extradition law. Worst still, this is happening at a time when foreign talent is thinking about leaving the city.
Financial firms have become more discreet when considering local hires, though this is not written in black and white. This is particularly the case for firms that are aggressively expanding in mainland China, Eva Law, chairwoman of Association of Private Bankers in Greater China Region, told AsianInvestor.
The protests have drawn more radical participants from university students than other age or social groups. But companies are not allowed to judge candidates on their political views during the recruitment process because of potential liabilities. That is leading some firms to avoid recruiting local young people as a risk management practice, a Hong Kong-based investment committee member for an endowment fund told AsianInvestor.
“Realistically they will definitely avoid some high-risk groups… there is certainly an impact [in light of the violent protests], particularly on young people,” he said.
“For Hong Kong students who have just graduated from those universities [that are seen to be at the forefront of the protests] and are looking for jobs now, I can tell you that there is definitely an impact,” said a senior manager at a Hong Kong-based joint-venture fund firm in Hong Kong.
The senior manager said that not only is his firm more cautious about hiring these new graduates, but global managers have practical concerns too. Local youngsters might not be devoted to working as they are involved too much in social movements, he said.
Senior executives at several financial services companies — including banks, asset managers, accountancies and law firms — have said they have concerns about the recruitment of anyone who has participated in activities deemed illegal by local authorities during the protests because it could affect their relationships with mainland Chinese clients, The Financial Times reported last week.
Managers at three Hong Kong-based global hedge funds said they would implement an unofficial hiring freeze on locals, according to the report.
Nevertheless, the hiring bias does not appear to be happening on a large scale. The chief investment officer of a global private bank, a senior executive at an international fund firm and others told AsianInvestor that they have not seen signs of an unofficial hiring freeze of local Hong Kongers.
“We have made some recent hires and they are local. We do not discriminate,” a Hong Kong-based investment manager at a global fund firm told AsianInvestor on condition of anonymity.
“It's really sad and very short-sighted of [some fund firms] to make hiring decisions based on these things too," he said, adding that the decision goes against the company's hiring policy which is to encourage ethnic and cultural diversity.
“I am not aware of this. I think [if this is really happening], it will send a negative [message] around the world,” said Stewart Aldcroft, senior fund industry adviser at Citi in Hong Kong.
Fund managers that avoided hiring local professionals would send a signal they are not prioritising their professional expertise, and they would risk losing some of the best talents in the market, he added. Ultimately that isn't good for Hong Kong's image as an international financial centre.
Two Hong Kong-based recruiters also said that the hiring practices of global asset managers remain commercial-driven.
"Trying to avoid hiring young Hong Kong talents because someone [might have] participated in the protests... just sounds very short-sighted to me," one headhunter said.
"Recruitment is a two-way street. These corporations have to employ and need the best talents in the marketplace in order for them to survive. And the reverse could happen where they become a bad employer brand. And that bad employer brand doesn't just mean that young people might not want to work there, senior people may not want to work in such an environment either," he said.
"I think it's a pretty dangerous game to play... it is saying that everyone of a certain age or nationality is linked to potentially criminal activity," he added.
Law noted that the decision of some firms to avoid hiring local Hongkongers is concerning because it highlights the escalating tensions between Hong Kong and China. The unnamed executive at the endowment fund agreed, noting that tensions between China and Hong Kong are at a historic high.
The reluctance of some firms to hire local young people comes at a time when more expatriate executives are thinking about leaving Hong Kong in view of mounting disruption and increasing violent clashes at the protests.
More mainland Chinese professionals are also reluctant to come to work in Hong Kong, the member of the endowment fund said.
Plans to move elsewhere are partly driven by concerns about their personal safety.
"White-collar professionals [in Central] were escaping the tear gas... most of them were out for lunch. Would an accountable government allow such a mess to happen in the financial city centre? Even the city's elites are no longer safe," former Hong Kong lawmaker Nathan Law said on Twitter on November 11 during a particularly violent series of events.
Ho Ching, the head of Singapore sovereign investor Temasek, also said in October that the focus of the Hong Kong protests needed to shift from “the movement of some money and people to Singapore” to the loss of professional Hong Konger talent more broadly to other parts of the world.
In other aspects, the turmoil in Hong Kong has already damaged investor confidence in Hong Kong and its international wealth hub status. It has also pushed Hong Kong into a technical recession, defined as two consecutive quarters of negative growth.
The protests can be traced back to the government’s attempt to pass a bill that allowed the extradition of suspects to China. On June 9, 1 million demonstrators took to the street peacefully to protest against the bill due to their deep distrust of mainland China's legal system.
It took the government four months to withdraw the bill, following heavy and sustained protests, but the demonstrations had by then broadened to include other political demands including universal suffrage, something to which Beijing is unlikely to agree.
An end to the situation is still nowhere in sight. Around 800,000 protesters participated in a mostly peaceful march last weekend to protest against the government.
*Jaycee Man contributed to this story.