HONG KONG (BLOOMBERG) - Hong Kong's stringent Covid-19 restrictions turned the city into a dead end for the legions of finance workers decamping for other destinations. Those who choose to stay are being presented with the sort of opportunities that do not come along very often.

Interviews with headhunters, executives and employees across the finance and digital-asset industry depict intense competition for tech-savvy workers who are willing to endure life in a city that is largely isolated from the rest of the world. For such people, opportunities abound for big promotions and big pay increases - at least in the short term.

"When there's a shortage of talent, people use this as an opportunity to bid up their wages," said Ms Christine Houston, the managing director of executive search firm ESGI who focuses on the finance industry. "They're more in demand than they'd been a year ago."

Typically, finance workers in Hong Kong would get roughly a 15 per cent "walking across the street money" pay increase to compensate for the risk of moving to a new employer, Ms Houston said. Now, it's "certainly no less than 20 per cent to 30 per cent".

The number of new visas issued to foreign financial service workers fell to 2,569 last year, down almost 50 per cent from 2018, calculations based on government data showed. And that was before the Omicron variant penetrated Hong Kong's defences, prompting the government to unleash some of the world's strictest social distancing curbs.

More than 140,000 more people have departed Hong Kong this year than arrived, one of the biggest emigration waves in the city's history and almost four times the total for all of 2021.

Many were driven away by quarantine policies that, in some cases, separated parents from their children, and the threat of a mass testing drive accompanied by a citywide lockdown. Others were fed up with lengthy quarantines that made business travel and visiting family overseas impractical.

While Chief Executive Carrie Lam recently changed tack, postponing the testing plan and shortening hotel quarantine for inbound travellers to seven days, the damage had already been done.

An individual or a family might take anywhere from weeks to months to emigrate, depending on whether they are willing to leave without a job. But companies operate on much longer time horizons, and executives are fearful of redeploying large numbers of employees to other locations only to see the local market pick up again.

And Hong Kong has bounced back sharply before. In early 2003, life ground to a near-standstill during the short-lived Sars virus outbreak, and the benchmark stock index hit a 4½-year low.

The following year, China made it easier for its citizens to visit the city and the economy took off, ushering in a boom that lasted until the global financial crisis.

In Hong Kong's case, there is an added complication: Companies are wary of alienating Chinese government officials, who are exercising greater influence over the territory after the mass protests of 2019. Many of the Wall Street banks occupying the glass-and-steel towers of the Central business district are drawing up ambitious expansion plans for the mainland market.

Financial-industry pay inflation has been a "significant issue" over the past 15 months, and has accelerated this year as the wave of departures sparked a bidding war for remaining talent, said Mr John Mullally, regional director at Robert Walters in Hong Kong.

That might leave those who extracted outsize pay increases exposed to a sharp reversal should Hong Kong return to being a big draw for expatriates - or if companies do start shifting jobs elsewhere on a major scale. Another problem is that some people are now getting overpaid, Mr Mulally said.

"In the short term, there is definitely opportunity for people to take advantage of the market dislocation," he said. "In the long term, it's not a good thing."

'It's a talent war'

Adding to the battle for talent is Hong Kong's burgeoning crypto industry, which spawned unicorns such as Amber Group and Animoca Brands. The sector currently accounts for at least one in 10 new job opportunities in financial services, said Ms Olga Yung, a managing director at Michael Page Hong Kong.

Take crypto-trading platform Amber, which last month raised US$200 million (S$272 million) from investors including Singapore's Temasek at a US$3 billion valuation. Its global headcount has expanded fourfold since February 2021, and it is looking for staff in Hong Kong with backgrounds ranging from traditional finance to human resources to legal services.

"Given our profitability, frankly speaking, we can pay as well, if not better than, anyone," co-founder and chief executive Michael Wu said in an interview, without providing specifics. "It's a talent war."

A return to glory?

A senior executive at a top Wall Street bank in the city, who asked not to be named due to the sensitivity of the issue, said the stream of departures means mid-level workers in sales and trading have been getting pay increases in the 25 per cent to 35 per cent range since June last year when they move to similar jobs at other firms.

Movements between banks have slowed slightly in the past months because of market volatility and the war in Ukraine, but it is expected to bounce back this year as trading revenues recover, the executive said.

The scramble for talent has been good for Ms Houston's headhunting business too. After a "stagnant" 2020, revenues are back to 2018 levels, before the mass unrest of 2019 ushered in a period of political turmoil and uncertainty that persists to this day.

And she predicts that if Hong Kong's leaders can chart a path out of "Covid Zero" without the frequent policy changes that have vexed locals and expats alike, the city will once again become a magnet for finance workers.

"If there's a road map put out, and if we're sure they won't flip flop again, once you get that, I am telling you Hong Kong will pick up immediately and people will start coming back," she said.