International and regional business leaders from more than 100 financial institutions wrapped up a three-day summit in Hong Kong on Thursday, widely seen as a sign that the city is reopening after the recent lifting of some of the world’s toughest COVID-19 restrictions .
Hosted by the Hong Kong Monetary Authority, the city’s de facto central bank, the gathering of more than 200 financial heavyweights was the city’s largest in nearly three years.
Hong Kong, consistently ranked as the world’s third-biggest financial center after New York and London, has been hit by social unrest, self-imposed COVID-19 quarantines and reputational damage as it cracks down on dissent. Now, it hopes to make a comeback.
“We were, are, and we will remain one of the world’s leading financial centers. You can take it to the bank,” Hong Kong’s chief executive, John Lee, told the Global Financial Leaders Investment Summit this week.
Some U.S. lawmakers, including Rep. Chris Smith, top members of the House Foreign Affairs Committee Brian Lutkemeier and Lance Gooden, asked executives at major banks to reconsider attending the meeting, saying their attendance would Legalize China’s crackdown on the city.
Four executives did not attend the summit. Timothy Armor, CEO of Capital Group Co., cited health reasons. Blackstone President Jonathan Gray and Citigroup Inc. CEO Jane Fraser tests positive for COVID, Barclays Plc. CEO CS Venkatakrishnan canceled, citing scheduling conflicts.
Most of the other attendees, including the chairmen of Goldman Sachs, Morgan Stanley and UBS AG, were there, some expressing confidence in Hong Kong.
China passed a national security law in 2020 in response to widespread, often disruptive and sometimes violent protests in Hong Kong in 2019 over a bill aimed at extraditioning economic criminals to the mainland. Since the passage of the law, media outlets supporting the protesters have shut down, and some of their staff, along with protesters and others, have been arrested on charges of secession, subversion, terrorism or collusion with foreign powers.
The arrests have sparked fears that the city is controlled by Beijing, but Li and the government insist that the “one country, two systems” model that should be governed by the former British colony remains in place since its return to Chinese rule in 1997. persist in.
“The worst is over,” Li said in his speech. He said Hong Kong had regained its stability and touted the city’s uniqueness: its proximity and seamless connection to the mainland “gives Hong Kong an advantage that no other economy can get”.
Lee also pointed to government policies aimed at boosting Hong Kong’s competitiveness, including plans to use fiscal reserves to guide economic development, a $3.8 billion fund to attract businesses through co-investment, and plans to attract talent, including issuing visas. Graduates from the world’s top 100 universities.
On the way to a comeback?
Experts say it must do more or risk being overtaken by Singapore.
First, they said, the government should lift all COVID-19 restrictions, including the current 0+3 policy, which no longer requires hotels to quarantine, but still wants tourists to avoid restaurants for the first three days after arrival. If you test positive, you must quarantine for 7 days.
“When I talk to major financial markets like Singapore, the U.K., the U.S., they’ve gotten rid of all these requirements. Hong Kong is an outlier in a way,” said Sally Wong, chief executive of the Hong Kong Investment Fund Association.
“While we claim to be a super connector, connecting China and the rest of the world, we cannot live up to that reputation,” she said.
A July survey by her association found that 35 percent of member fund managers had moved some or all of their regional or global positions from Hong Kong to other offices, partly because of COVID-19 policies.
Analysts say China also needs to allow Hong Kong residents to enter the mainland without quarantine.
“Hong Kong cannot come back independently from China; it is impossible. Its business comes from China,” said Andy Xie, an independent economist based in Shanghai. “The real start is when China exits ‘zero outbreak’ and we can talk about other things.”
While there are many cross-border setups aimed at enabling mainland Chinese investors to invest in overseas markets through Hong Kong and vice versa, stringent requirements need to be relaxed to make these services a reality, Wong said.
“Currently, the main investment in the mainland is the stock market and the real estate market, and investment options are very limited and domestically oriented. As the middle class grows, there is an increasing need for a diversified investment portfolio,” Wang said. “Hong Kong is definitely a key gateway to tap this potential.”
Although about 1.5% of Hong Kong’s population left, 98.5% stayed, and Hong Kong continued to see young professionals from mainland China and elsewhere move to Hong Kong.
Hong Kong hairstylist Fang Du, watching news reports about the summit on TV, said the summit was a good idea, but the worst may not be over for Hong Kong. Hong Kong has experienced negative growth for three consecutive quarters this year, with the economy shrinking by 4.5% in the third quarter. Like many residents, she hopes things in Hong Kong will improve soon.
“Everyone wants their country to do better. … I have full confidence in Hong Kong’s future,” Du said.
Combining business and entertainment, the Hong Kong Sevens, the annual international rugby championship, kicked off this Friday for the first time since the COVID-19 outbreak.
While encouraging the treasurers to enjoy the Sevens game, Lee delivered the message, pushing the goal post at the end.
“The opportunity and the timing, right here, right here in Hong Kong,” Li said, “this is the moment you’ve been waiting for.” Go for it. Go ahead, not behind. “