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Will protest-hit Hong Kong lose financial business to Singapore amid a growing climate of fear? The answer isn’t so clear-cut
- Hong Kong is still the market of choice for large equity offerings but businesses may well look to move regional headquarters and private banking to Singapore
- In the current climate, most analysts in Asia are reticent to discuss Hong Kong’s future to avoid offending China
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Debate about which among competing Asian financial centres will eventually emerge as the “winner” has gone back and forth for decades and, lately, some have argued that Hong Kong has ruled itself out of contention with its protest movement. That, however, may be a premature and overly simplistic conclusion.
All other things being equal, Singapore, with its demonstrated respect for the rule of law in business matters and its political stability, appears to be on top now as Hong Kong battles with civil strife and questions about the city's continued legal independence.
Viewed from this perspective, there is “no contest” between Singapore and Hong Kong, Jesper Koll, a veteran Tokyo-based analyst, suggested. “That's why people in Hong Kong are protesting. They do not want to live in a place that does not have a free and fair process under the rule of law,” he said.
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It is not only the rule of law that matters in business, however. Japan, too, has the rule of law (albeit a rigidly codified civil law rather than the more flexible common law Hong Kong and Singapore inherited from Britain). But this has not secured Tokyo a place as a global financial centre.
Sheer size and power also matter and, as the world's second-largest economy, China has both. “If Beijing told financial firms they had to set up in Shanghai or get no more China business, they would all relocate within a week,” Kenneth Courtis, former managing director of Goldman Sachs and vice-chairman of Goldman Sachs Asia, told me.
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