Hong Kong’s investment interests in the UK undaunted by Brexit, says official
Sajid Javid, Secretary of State for Communities and Local Government cites the UK’s open economy and stability as reasons, but analysts suggest it is the price of the pound
Hong Kong companies and individuals are still investing in the UK, particularly in British property despite the uncertainty in the country’s prospects in the short and long term.
Sajid Javid, the UK’s Secretary of State for Communities and Local Government said this was because of the UK’s welcoming attitude to foreign investment, but analysts pointed out that the low level of the pound was a bigger draw.
“Hong Kong companies have invested US$8 billion dollars in the UK this year, and one of the reasons is that people recognise it is an open economy that welcomes foreign investment,” said Javid, who was in Hong Kong last week after visiting the China international industrial fair in Shanghai, as part of a British delegation.
Much of the investment from Hong Kong companies is into the UK’s property sector.
In February, Henry Cheng Kar-shun, chairman of Hong Kong’s New World Development, committed to invest £1 billion (US$1.3 billion) to develop a mixed property project in London, and in April, mid-sized Hong Kong developer Far East Consortium International announced plans to build 10,000 housing units in Manchester worth £1 billion over the next decade.
“We are seeing more investment from Hong Kong into commercial and residential property in the UK, but the main reason is the value of the pound is so low,” said Dennis Ma, head of research at property consultancy JLL.
The pound’s value against the US dollar is currently 11.5 per cent lower than it was the day before the UK voted to leave the European Union on June 23 last year.
“Hong Kong investors are concerned that property prices in Hong Kong are nearing their peak, and while there are similar concerns in the UK, investors are less concerned because they expect the value of the pound to revert to the mean, and rise to nearer its former level,” said Ma.
Another reason Javid gave for the continual interest in the UK as an investment destination was its stability.
“What makes Britain stand out is its stability, ultimately you have the election cycle, but you see stability in Britain’s core economic approach as a country welcoming investment from around the globe.”
The UK is not stable in every regard however.
In the longer term, negotiations between the UK and the European Union on a future trading relationship have not yet begun, as the EU feels insufficient progress has been made on defining the terms on which Britain will leave the EU.
There is also short term instability within the British government. This month, Defence Secretary Michael Fallon resigned over allegations of sexual impropriety, and overseas aid minister Priti Patel quit after failing to cover up meetings she had had with senior Israeli ministers while on holiday to Israel.