Hong Kong’s symbiotic relationship with mainland China has both positive and negative repercussions for the city, a forum heard this week.
On one hand the influx of mainlanders to Hong Kong to save and invest and the city’s position as gateway to China underpins its role as a wealth management centre in Asia.
On the other, underlying political and social tension that sparked the Occupy Central protests last year calling for greater electoral autonomy could boil over once again since the issues remain unresolved.
A debate about Hong Kong as Asia’s premier asset and wealth management centre at the Asian Financial Forum this week heard panelists discuss the potential impact of Occupy Central on the city’s status as a financial hub.
Kathryn Shih, head of wealth management for Asia Pacific at Swiss bank UBS, confirmed that foreign investors had started to get nervous as the protests in the city became prolonged.
While she said that had quietened down with what she called “the resolution of Occupy Central”, she suggested it was business as usual on the surface.
“I am personally concerned,” she noted. “I have seen there is a big group of people that felt they could break the law if they believed in something, and this is something that challenges the stability of rule of law in Hong Kong.”
She had earlier outlined rule of law as one of Hong Kong’s key strengths and a prerequisite for the city as a wealth management centre. That, combined with sound educational and medical systems and financial and tax planning services, was attracting mainland Chinese to the city to save and invest.
But Shih said she had “lingering worries” over the demonstrations. “I hope we can see the government and private individuals address some of the population’s concerns and get the people to become as positive as we have always been.”
Barry Stowe, chief executive of Prudential Corporation Asia, agreed that the protests in Hong Kong had been viewed with increasing levels of alarm as they stretched across weeks.
But he questioned Shih’s point that question marks had been raised over Hong Kong’s rule of law. “I think it will worry Beijing because it will undermine their sense about how public protests should play out,” he said.
“But in some respects it did affirm that people in Hong Kong have a level of freedom of speech and expression that people in the mainland do not have.”
Stowe added that while he did not want to underestimate the importance of what had happened or the potential for further unrest, he cautioned against “the CNN effect”.
“We do have to understand that the way the media plays these events makes them appear far worse than they really are,” he stressed.
Cheah Cheng-hye, chairman and co-chief investment officer at Hong Kong hedge fund Value Partners, pointed out that unlike Singapore (chief rival for wealth management hub in Asia), Hong Kong did not have an option to become independent.
While he acknowledged that Hong Kong being part of the People’s Republic of China was not in dispute, he spoke eloquently about the consciousness of Hong Kong, saying people deserved some solutions.
“We need to find new compromises between the different factions of Hong Kong society, the authorities in Beijing and increasingly public opinion on mainland China itself,” Cheah said.
“I am a little pessimistic right now because I think we are not seeing [the need for] it. I think we are having real trouble grasping this fundamental point.”
Earlier Shih had spoken with passion and optimism about Hong Kong’s position as a wealth management centre. She serves as chair of the recently established private wealth management association in the city.
Shih noted the body had 40 members now and estimated that there was a community of 4,000 wealth management practitioners in Hong Kong.
She added the association had introduced an “enhanced competency framework” late last year to raise industry standards, with the aspiration to get most of these 4,000 professionals accredited within three years.
“This is an important measure in getting the wealth management industry in Hong Kong and our contribution to Asia up one more notch,” Shih said.
She noted the association was also working with Hong Kong’s Financial Services and Treasury Bureau to create a Master’s programme in wealth management. “There is a lot we are doing to keep Hong Kong a vibrant wealth management centre,” Shih argued.