Hong Kong’s premier finance hub status under threat
(5 November 2019 - Hong Kong) Hong Kong has defied predictions it could lose its position as Asia’s top international financial centre to Shanghai and Singapore but critics question for how much longer?
Promoters say Hong Kong’s laws make it the perfect gateway for China to connect with global markets and highlight major financial institutions headquartering their Asian operations in the city. However, share trading volume is now lower than Shanghai and the wealth management industry is struggling to maintain asset growth as Singapore’s expands two fold. Taxes are low yet rents are unsustainably high.
Coupled with pro-democracy protests disrupting daily life, the local economy has slipped into a deep recession with a 3.2 percent Q3 2019 decline in economic activity. Falling export volumes were compounded by a collapse in consumer spending and a loss of tourist revenue.
“The near-term outlook remains downbeat. Shipments through the city are likely to shrink further in the coming months as the global economy continues to cool. And disruption from the protests worsened at the start of this quarter with no immediate resolution in sight. As a result, Hong Kong’s GDP will probably continue to contract in the fourth quarter. The political crisis has done lasting damage to Hong Kong’s reputation as a stable, autonomous financial hub” stated Capital Economics Senior China Economist Julian Evans-Pritchard.
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