HONG KONG'S STATUS as China's financial gateway was cemented by the end of 2005, when H-share companies raised a total of HK$159 billion from domestic and foreign investors. These capital-raising exercises by the Hong Kong-listed units of companies incorporated on the mainland helped boost the total amount of funds raised locally in 2005 to HK$302 billion, making Hong Kong the top market in Asia and fifth-largest in the world for such activities. The question is whether Hong Kong can maintain its position as a pre-eminent international financial centre, or whether the status and the associated job opportunities will pass to Shanghai. 'There are a million different theories, but I can't see why both wouldn't flourish,' said Anthony Thompson, managing director, Hong Kong and southern China, at recruitment company Michael Page International. 'Many global companies have located their regional headquarters in Shanghai, while others prefer Hong Kong as it is closer to Southeast Asia.' Late last year, Hong Kong's Securities and Futures Commission (SFC) drew on a study conducted for the Corporation of London, which identified 14 key factors important for financial centres. The objective was to measure how Hong Kong stacked up against its rivals. The SFC put the factors into six main categories: availability of skilled personnel and access to professional services; regulatory environment and government responsiveness; access to international financial markets and customers; availability of business infrastructure plus a fair and just business environment; corporate and personal tax regime; and operational costs and quality of life. The conclusion was that Hong Kong was ahead of other Asian markets in most areas, based on the evidence of various studies. The city was found to have the necessary critical mass of expertise in the financial services and related professional sectors, the regulatory framework was adjudged sound by international standards, and the government was said to be responsive. The SFC also emphasised that Hong Kong had been acknowledged as the freest economy in the world, that the tax rates were very low, and the tax system simple and efficient. Nevertheless, the SFC admitted the original study had concluded that New York and London were the only two genuinely global financial centres. Opinions were divided on whether there was scope for a third such centre. Most respondents in the Corporation of London survey agreed that if there were another global centre, it was most likely to be Shanghai, but not soon. This was despite that Hong Kong was recognised as having a deep and diverse pool of professional talent supporting long-established financial institutions. Hong Kong has the fourth-largest number of chartered financial analysts in the world, after the United States, Canada and Britain. The number has increased from about 200 in 1995 to more than 3,000 today. Meanwhile, the number of certified public accountants has risen from 11,500 in 1995 to more than 25,000 now. Over the same period, the number of qualified actuaries has almost tripled, according to SFC figures. Factor in the army of 5,000 solicitors, 1,000 barristers and thousands of IT experts and support personnel and it becomes evident why some 3,800 overseas companies have set up their regional operations in Hong Kong. 'Their presence forms a strong and growing business and client base, which in turn raises the demand for various kinds of financial, business, professional and trade services,' the SFC report said. In the past two years, that had translated into a very buoyant recruitment market. It had been driven by the finance sector and the continuing growth of the manufacturing sector in southern China, Mr Thompson said. Deborah Morgan, director, Hong Kong operations, Manpower Hong Kong, said the economic recovery had triggered additional recruitment in the banking and finance sector. 'This is understandable, considering Hong Kong's traditional reputation as a regional hub,' Ms Morgan said. 'Companies are still interested in hiring. Of course, they also recognise the need for support roles. People for IT, secretarial, administration and marketing roles are also in demand.' In his 'Viewpoint' column for the Hong Kong Monetary Authority, HKMA chief executive Joseph Yam Chi-kwong said the minimum requirement for Hong Kong to qualify as a global centre was to have key international financial markets located here. 'We qualify as an international financial centre if investors and fund-raisers from outside Hong Kong [including those from the mainland] use the financial intermediation channels in Hong Kong,' he noted. It was Mr Yam's view that a cost-effective, efficient and safe market infrastructure was also necessary. 'I would include the trading platform, involving the intermediaries such as the brokers and market makers, and the payment, settlement, clearing and custodian arrangements,' he wrote. Touching more obliquely on the issue of Hong Kong versus Shanghai, he said the mainland was becoming a highly significant player in its own right. However, it was the central government's firm policy, laid down in the 11th five-year plan, to support Hong Kong's development of financial services and its status as a leading financial centre. 'Perhaps a good way of implementing this policy would be for the mainland's international financial activities to make greater use of Hong Kong before going to other jurisdictions in other time zones. Of course, this should be done on market-based principles, and without compromising cost-effectiveness,' Mr Yam added. Hazy OUTLOOK Despite anticipated growth across six industry sectors, the latest survey by Manpower reveals that Hong Kong employers report a decrease in hiring intentions for the first quarter of 2006. A representative sample of 821 Hong Kong employers were asked how staffing levels were likely to change in the first quarter, compared with the previous three months. The results were used to calculate the net employment outlook. Allowing for seasonal adjustments, the outlook for the first quarter was 18 per cent, a fall of 13 percentage points compared to the fourth quarter results for 2006. News remains good for the finance, insurance and real estate industries, where employers reported a net employment outlook of plus 22 per cent. Despite being 21 percentage points lower than the previous quarter, it is five percentage points more than the same time last year.