Wall Street’s top bosses descend on HK for global summit even as city’s finance hub status fades
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Hong Kong can still attract the who’s who of finance, but its future as an international melting pot of dealmaking and trading is fading.
PHOTO: REUTERS
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Hong Kong – Hong Kong can still attract the who’s who of finance, but its future as an international melting pot of dealmaking and trading is fading.
The de facto central bank of the Chinese territory is this week holding its global finance summit for a second year in a row.
Conceived in 2022 to restore confidence after years of Covid-19 restrictions and a tightening political climate, the Nov 6-8 summit’s rubric is “Living With Complexity”.
About 300 executives are expected to attend, including heavyweights such as Citadel chief executive Ken Griffin, Goldman Sachs CEO David Solomon and Morgan Stanley’s James Gorman.
They are descending on a city that has been transformed over the past few years – where finance firms have slashed hundreds of top jobs and tens of thousands of high-skilled people have emigrated.
But it still has one key feature that will ensure firms keep a foothold: its economic and financial links to the Chinese mainland.
Hong Kong’s financial sector is being deeper integrated into the Greater Bay Area, tying it closer to a Chinese region with 86 million people. Part of this includes an opening of wealth management across the border, trading links and various talent schemes for mainland professionals.
“Hong Kong will always have a role given the size of the mainland,” said Dr Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis.
“It is not a global financial centre any more, and I don’t think it will ever be – it will be an offshore centre of the mainland, and jobs will be created, but maybe not the same jobs.”
Pressure is coming from all directions, including the tightening control from Beijing, a property crisis on the mainland, rising interest rates and an uncertain domestic economic recovery.
While many banks are eliminating jobs globally, the cuts in Asia – and China-focused bankers in particular – are the biggest in years.
Among recent cuts, UBS Group trimmed about 7 per cent of its global banking unit in Asia, with most relating to China-focused roles based in Hong Kong.
Earlier in June, JPMorgan Chase & Co slashed about 30 Asia dealmaking jobs, with Hong Kong and China-based staff taking the biggest hit.
Investment bankers in Asia had their worst payouts since the financial crisis more than a decade ago.
Hong Kong’s authorities have accelerated efforts to revive its hub status.
Chief Executive John Lee announced in the city’s policy address in October that the government will lower the stock trade stamp duty,
In the first nine months, the city’s exchange saw 47 initial public offerings, raising a total HK$24.6 billion. That was down 67 per cent from the year-earlier period.
The latest economic data shows Hong Kong’s gross domestic product rose 4.1 per cent in the third quarter.
Even though the figure missed estimates, Citigroup economists pointed to an earlier-than-expected rebound in gross fixed-asset investment.
This recovery is typically a function of confidence in Hong Kong as a gateway to the Chinese market, although it remains to be seen if the rebound is sustained in the next quarter, the economists said in a report.
Hong Kong’s growing reliance on mainland China is also one of its biggest risks.
Foreign investors have been pulling record amounts out of the country, and a sluggish economy and geopolitical risks have triggered banks to reassess expansion plans on the mainland.
At the 2022 summit, held when the mainland was still adhering to its zero-Covid policy, a top Chinese regulator urged global banks to not “bet against China” even as Wall Street’s top bosses studiously avoided any talk of growing risks.
“The summit of top finance leaders is likely seen as the best way to sell the attractiveness of Hong Kong to key decision-makers,” said Moody’s Analytics assistant director-economist Heron Lim.
“However, given the wider trends, global investors would have to be convinced of not just Hong Kong, but also China’s future growth potential before making further commitments.” BLOOMBERG
