The Global Financial Leaders’ Investment Summit on Wednesday was seen as an opportunity to kick-start Hong Kong as a financial centre after a strict, and highly unpopular, Covid lockdown.
Held in the opulence of the Four Seasons hotel, it drew a delegation of around 300 from 20 countries, but a mixed response from local industry players.
The naysayers asked if it was really necessary for the Hong Kong Monetary Authority (HKMA) to put on such a high-grade, high-octane event just to say 'We are open for business'.
There is no denying, though, that Hong Kong did need to reassert itself, to ward off the challenge of rival centres. The steady exodus of financial sector talent from Hong Kong reflects not just the isolation enforced by Covid, but the erosion of freedoms stemming from the National Security Law.
While the summit's opening address by new chief executive John Lee was tone-deaf on this – calling Hong Kong “the world’s freest economy” and emphasising a free press as one of its competitive advantages - he was on firmer ground describing Hong Kong’s “unique convergence” with China, making it “irreplaceable” as the gateway to the mainland.
WORST IS BEHIND US
Lee did acknowledge that Hong Kong had some serious challenges to deal with, even before Covid, referring to the “disturbances and violence in 2019”, but adding that “the worst is behind us".
People’s Bank of China (PBoC) governor Yi Gang observed that Hong Kong had shown “remarkable resilience despite disruptions”. He suggested that offshore Rmb business will be one of the most important growth areas for Hong Kong as a financial centre.
The presence via video of senior executives from the PBoC, the China Banking and Insurance Regulatory Commission (CBIRC) and the China Securities Regulatory Commission (CSRC) ensured a strong message of support from the mainland.
CSRC vice chairman, Fang Xinghai, said Hong Kong is a crucial element in helping China become “a high-quality economy”.
“China still does not have high-quality capital markets and enough high-quality financial players. For China’s sustained economic growth, we need Hong Kong.”
Among the new policy initiatives being proposed by CSRC is broadening the scope of Stock Connect and a “relaunch” of the treasury bond futures market.
Lee pointed out that China’s 20th Party Congress and the Five Year Plan include specific support for Hong Kong’s financial sector, the development of its fintech industry and the creation of a new "northern metropolis" on the border with Shenzhen.
For its part, the HKMA is committing US$3.8 billion to support growing Hong Kong businesses, practical support for "strategic enterprises" and a one-stop facility to assist with the hiring of overseas talent.
For investors, the short-term uncertainty is set to continue for perhaps another two years, said panellists at the summit.
Colm Kelleher, chairman of UBS Group, said wealth management clients were sitting on “record levels of cash. I don’t think it’s a capitulation; people are just waiting for some stability.”
The Hong Kong Financial Secretary, Paul Chan, made it to the conference with hours to spare after catching Covid while in Saudi Arabia. Despite testing positive on his return to Hong Kong the day before, he was allowed to speak at the event, unmasked. This does not sit well with those (that is, everyone else) who must undergo several days of testing and forced isolation on arrival in the territory.
Chan told the delegates the prospects for fintech and sustainability in Hong Kong were “promising”. However, the conference panel on the opportunities of fintech may have backfired a little. Several of the speakers gave examples that highlighted how far ahead Singapore is as a centre for fintech and cryptocurrency platforms.
Daniel Pinto, president and chief operating officer of JPMorgan Chase, said their work with Singapore institutions “highlights the challenge for Hong Kong in fintech”.
Bill Winters, group chief executive of Standard Chartered, said his message to regulators is to “bring crypto into the system. In that sense, the approach taken by the Monetary Authority of Singapore is correct.”
A common complaint from the Chinese speakers was that foreign commentators misunderstand China. A little more transparency might help, it was suggested by the foreign contingent. Kelleher said: “Whilst we are all in favour of China, we are waiting for it to open up, post-Covid.”
There was no mistaking the overall message: Don’t bet against Hong Kong. As Liu Jin, president of Bank of China put it: “The certainty of Hong Kong is the certainty of China.”