Make Hong Kong Great Again? With some creative planning, it’s possible
- As Hong Kong’s woes pile up, Asian cities such as Tokyo or Singapore are jostling to take its place as a key regional financial centre
- But the trade hub still has some things going for it, including a well-developed stock market, English common law and a distinct role in the Greater Bay Area
I’ve personally spent much of my time since April on such an exit, closing down a 10-year-old global hedge fund and becoming a rudderless Responsible Officer. A sign of the times.
TOKYO MAKES A STRONG BID
Today, the objections of moving an asset management operation or headquarters to Tokyo are simple: high taxes, complex regulations, and low standards of English. None of those arguments posed much of a problem in the 1980s, however. Back then all you had to do was make lots of money! We gladly suffered the high taxes, worked around the rules and learned some survival Nihongo to get around Roppongi.
The city’s current attempt is led by the second-term Tokyo governor Yuriko Koike, following on from her promises during her first term to make Tokyo a financial powerhouse again, which didn’t happen.
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I met Koike briefly twice during her first term, and she was very aware of the problems Hong Kong was facing. At the same time, she reminisced over her earlier career as financial anchor for Nippon TV when Tokyo was at the top of its game, and wanted it back.
In her first term, Koike had assigned the task to attract financial firms back to a crack team of high-profile Japanese and foreign financial executives that covered the groundwork. But the city government was sidetracked by the tasks of relocating the Tsukiji fish market and figuring out how to keep the cost of the Olympics in check.
If she can continue the work to a conclusion this time and make Otemachi an effective financial economic zone that is easy to access, Tokyo could be a serious threat to Hong Kong.
SINGAPORE’S APPEAL COOLS
Singapore is so brimming with money it is at risk of overflowing. I ventured there at the end of 2018 with a fresh CV, and while standing in line with everyone else looking for a job, I got invited to an evening meetup with a group of fun-loving wealthy women and their financial advisers.
Amid all the champagne and caviar, it was clear the advisers were seeing an influx of money from Hong Kong, which added nicely to the business from their existing clientele paying for the vittles.
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However, Singapore is becoming less welcoming to foreign firms, which could throw a spanner in the works. It is difficult to get work visas as employers are under pressure to hire locals first or in addition to foreigners, which pushes up costs as local office workers are now in short supply.
HOW ABOUT TAIPEI OR SEOUL?
Can China, Japan and South Korea follow RCEP with their own free-trade deal?
But to take over as the region’s major financial powerhouse, Seoul will face challenges. While it has a very well-developed financial market and internationally minded investors, the South Korean government has done little, if anything, to attract foreigners.
MAKING HONG KONG GREAT AGAIN
To my mind, all is not lost for Hong Kong despite the pessimistic mood that prevails at the moment. But we need some strategic thinking from our government, and a plan of action with enthusiasm to match.
• Hong Kong has an English-speaking culture and common law legal system. It has been suggested that foreign firms operating in the Greater Bay Area may choose the city as the applicable jurisdiction for contracts.
• It has a well-developed and broad stock market that can be further promoted with new products absent in Asia as well as new incentives for asset managers, making it easy for them to come here – or stay put.
• As a trade hub, it can hold a dominant position through the Hong Kong dollar as the transit mechanism between the renminbi and freely exchangeable currencies, although as I have argued before the peg could be reformatted and strengthened.
Will Hong Kong’s biggest-ever reclamation project solve its housing woes?
Most urgently, it has to become cheaper to live and operate a business here, with commercial and residential rents and the basic cost of living being brought sharply into check. There have been a few sharp words from Chief Executive Carrie Lam aimed at the supermarkets, but I haven’t noticed much change in my monthly outgoings.
With perhaps China seen to be coming to Hong Kong to do business with the world rather than the world coming to Hong Kong to do business with China, there will be more interest locally that will slow down the exodus, particularly in the financial industry led by the power of the Hong Kong stock exchange to launch initial public offerings.