The View

Moving to Shenzhen? Good luck on that one

PUBLISHED : Monday, 13 July, 2015, 9:46am
UPDATED : Monday, 13 July, 2015, 4:38pm

In the past year, as China’s capital markets buzzed with activity and the stock market boomed, Hong Kong seemed to come up short. In fact, pathetically short.

Every time a new public listing went to Shenzhen’s ChiNext bourse, for instance, newspaper commentators would decry another loss for Hong Kong. The idea was that Shenzhen was marching into the future with energetic and innovative strides, while red tape-ridden Hong Kong limped behind like a soon-to-be-extinct dinosaur.

The other obvious explanation – that greedy and short-sighted investors were being lured in by ChiNext’s insanely high valuations – often went unexplored.

A piece that ran last month in the Chinese online investment publication Gelonghui perhaps best exemplifies this narrative of a lumbering Hong Kong outdone by a vibrant China. Titled “Hong Kong, Please Forget Me,” the article went viral through WeChat. It was such a sensation that America’s Foreign Affairs journal republished it in English.

The anonymous mainland Chinese writer explains that he came to Hong Kong as a 20-year-old with big dreams but is leaving with big disappointment - not even sticking around the extra few months it would take to get himself a permanent resident’s card. He is going, of course, to Shenzhen.

“I felt cramped, without anywhere to put my energies,” he says of Hong Kong, and warns that he is not the only one taking his intellectual capital elsewhere. “This brain drain has been driven by the worsening of Hong Kong’s social atmosphere — complacent, lethargic, lazy.”

Not just lazy, but sick, as demonstrated by all that Umbrella Revolution business. “In any society, when students take to the streets, it implies there’s a sickness at the heart of society.”

It also implies that students don’t expect to get mowed down by tanks in speaking up, but we won’t get into politics here. The writer’s narrative is largely an economic one: Hong Kong is being eclipsed, he says, as demonstrated by the fact that China has a huge GDP while Hong Kong has just a weeny one.

“Besides the cluster of tall buildings in Central and the hordes of suit-wearing white collar workers that remind us of how this used to be a financial centre, the major software [i.e., human talent] has already been thrown off into the world and into the Mainland….

“On the other side of the river, Shenzhen is like a black hole, sucking in all of the scientific and technical talent. “

This includes the writer’s talent. “Starting next week,” he wrote in late June. “I’ll be chasing my dreams in the young and vibrant city of Shenzhen.”

Good luck in Shenzhen, buddy.

It is indeed an excellent and vibrant city. But let’s face it, Mr Talent, your timing stinks.

If you’re working in the finance industry, like you did in Hong Kong, you are stuck between plunging stock markets on one side, and increasingly unnerving government directives on the other. As in “no more IPOs” or “fund managers, stump up with your own money and catch those falling knives, that’s an order.”

While you probably won’t see students protesting, you may find some extremely irked investors. Indeed if they rushed your company and started beating up every financier in sight, who knows? The police might allow them to get in a few good head-knocks before intervening, just like they let citizens vent steam with those anti-Japanese protests a few years back.

Internet censors will be working triple time to remove comments on the blogosphere such as, “You call this the ‘China Dream?’” or “The authorities have stolen my money!”

The censors will be so busy that some unflattering narratives might slip through their filters. Like the theory that this whole bull market was just a desperate bid to generate easy profits for banks whose balance sheets are infested by rotten loans from the 2009 stimulus - . i.e, from Beijing’s last major hubristic attempt to orchestrate markets and mastermind risk management.

Hong Kong is not having a very good month either, mind you. But it seems a dinosaur’s fall to earth is closer than a dragon’s.

Valuations never got as crazy here. Perhaps Hong Kong investors were just too “complacent, lethargic and lazy” to run the Chinese shares traded here up to price-earning ratios exceeding 100 times.

That must be it.