After 945 days, Hong Kong dropped its mask mandate on Wednesday, marking the collapse of the city’s last piece of Covid-19 restrictions.
In the past year, we've read numerous stories about how Hong Kong lost its game to Singapore over talent, events, fund flows, as well as on different aspects of asset and wealth management growth, especially the family office business.
While Hong Kong can finally focus regaining lost ground on economic growth, the scars left by Covid might remain for some time.
From the annual budget released last week by the Hong Kong government, it's clear the city is trying hard to showcase its strengths and prove it remains a competitive financial hub in Asia for everything from family office development to its connection with mainland China, especially the Guangdong-Hong Kong-Macao Greater Bay Area.
In his latest public speech, Financial Secretary Paul Chan Mo-po reiterated that Hong Kong will always benchmark itself against London and New York as a top international financial centre.
Against this backdrop, AsianInvestor spoke to leaders in the region’s asset management industry for their take on Hong Kong's prospects in the high-stakes game of being a regional financial hub.
The following contributions have been edited for clarity and brevity.
Patrick Tsang, chairman
What we've seen in the last 12 months is that Hong Kong is always a bit slower in adopting different industries or new technology.
Because of Covid, the strict quarantine measures, and many other reasons, including political reasons, a lot of people have left Hong Kong.
In order to attract more talent, the Hong Kong government has decided to do more, for example, to make it an environment for virtual currencies and exchanges.
I think in the next one to two years, we will see a difference between Hong Kong and Singapore where blockchain-related projects will become more prominent in Hong Kong than in Singapore, which is different than a few years ago.
It’s a blessing for Singapore to get all the new people coming in and so on, but I think two things will come out of it: one is the locals are unhappy because everything has become more expensive, and it becomes more unaffordable to live there.
Secondly, all the expats and foreign workers who go to Singapore now are not making more money like they thought they would because of rising costs, including rent. So it is possible Hong Kong can become more attractive again. Will we see people moving back from Singapore to Hong Kong? I think this may happen.
People always ask us, is Hong Kong better or Singapore better? I don't think Dubai, Hong Kong, Singapore are competitors. I think they're actually complementary and yet different. It depends on what you're trying to do. If you want to access China, you need to go to Hong Kong.
Maybe Singapore seems to be more ahead today. But in one or two years, I think Hong Kong's advantages and quality will come back, and all three of these cities that we are involved with will not be directly competing. That's why we're doing all three regions [in terms of setting up offices] and not just one.
Sally Wong, chief executive officer
Hong Kong Investment Funds Association
I believe that in the past 12-18 months or so, the competition between Hong Kong and Singapore took centre stage. At that time, this focus was relevant because the Covid-19 policy had reduced our competitiveness.
But now since we are on par (as Covid-19 restrictions are no longer an issue), we should pivot back to the basics and fundamentals.
What defines Hong Kong is not how we stack versus Singapore, but how best we can act as an effective connector between the mainland and the rest of the world.
The connectivity should be two ways; and it should continuously be enhanced and deepened.
We have various connect schemes, which put Hong Kong in a very unique position; and this is something that other jurisdictions envy a lot.
Many global fund management companies are very interested in the cross-border Wealth Management Connect, ETF Connect, and Mutual Recognition of Funds Scheme.
But currently, the requirements are very prohibitive; and only a few fund houses are able to partake in these schemes.
To unleash the potential, there should be major enhancements so that more fund management companies and funds can participate.
If there are meaningful relaxations, Hong Kong will be able to show that it has a unique position as a connector or a transformer and that there is no better place than Hong Kong if you wish to access the mainland wealth pool.
Alicia García Herrero, chief economist, Asia Pacific
Natixis Corporate & Investment Banking
Hong Kong will do much better than Singapore this year, because Singapore is overheated, and Hong Kong comes from a recession.
The answer to Hong Kong is basically freedom.
As long as Hong Kong keeps that, Hong Kong will do better. It is very important that Hong Kong reverses immigration and keeps talent.
I think Hong Kong has the size and economic freedom to compete with Singapore. But economic freedom needs to remain, this is extremely important.
Hong Kong basically has done everything that was needed including now lifting mask mandates.
We are expecting Hong Kong to grow from -3% [in 2022] to 3% [this year], which means a huge change.
But this very much depends on mainlanders coming over, so the number is very uncertain. Other than visitors, Hong Kong can grow out of the bigger pile on China’s financial linkages with Hong Kong, which are the various connect schemes.
So, I would say Hong Kong will do better, but I think we need to realise that there's a lot of scars from Covid, [that the city] has been lost to Singapore and other financial centres, especially Singapore, that we are not coming back as 'here we are' in 2023, on both the tourism side and on the financial side.
I think, however, Hong Kong will benefit from the increasing data requirements [for Chinese companies] to list in the US. Although an agreement has been signed, it is still very tentative with the US. This will push companies to Hong Kong.
Oliver Wickham, Asia partnership director
St. James’s Place
What Hong Kong has got is that it is so uniquely placed with China. As we see the Greater Bay Area open up and evolve in years to come, Hong Kong is going to offer opportunities that Singapore probably can't compete with in terms of being the gateway to mainland China.
I often quote what Chris Patten said during the handover of Hong Kong to China by the UK, when there was a lot of panic about what was going to happen next and many people wondered if they should stay or go.
At the time, Patten said: ‘nobody has ever gotten rich betting against Hong Kong’.
Hong Kong is probably one of the most resilient cities in the world, and it's always going to bounce back. We absolutely agree with that. I think Hong Kong has a really bright future.
While we've had some difficult years, I think the mask mandate coming down is almost the last piece to fall away and shows Hong Kong is back and it's ready to grow again.
I personally think we're going to see lots of employers, lots of corporates, probably come out and start to fill lots of vacancies that have existed because they have struggled to get the right talent into those roles [until now].