HONG KONG — Hong Kong leader John Lee detailed the city’s connection to China in an address to some of the world’s top financial leaders on Wednesday, as he seeks to rebuild the Chinese territory’s COVID-hit image as a major financial hub.
Chief Executive Lee said at the Hong Kong Monetary Authority’s Global Financial Leaders’ Investment Summit that the city will continue to work to lift the 2019 coronavirus disease (COVID-19) restrictions.
The conference is the largest corporate event in Hong Kong as it closed its borders in 2020 and implemented ongoing restrictions to combat the pandemic. These measures have hit the economy hard and led to a brain drain.
Some of the world’s biggest bank chiefs, including Goldman Sachs’ David Solomon and Morgan Stanley’s James Gorman, are in Hong Kong for the first time in almost three years.
For foreign financial firms operating in China and Hong Kong, the summit comes as they manage tensions between the United States and China. Another major challenge is the dwindling talent pool in Hong Kong, often referred to as “Asia’s metropolis”.
“Hong Kong remains the only place in the world where the global advantage and the Chinese advantage come together in a single city,” Mr. Lee told around 250 summit participants, mostly local finance executives.
“This unique convergence makes Hong Kong the irreplaceable link between the mainland and the rest of the world.”
Eddie Yue, chief executive of the de facto central bank Hong Kong Monetary Authority (HKMA), said Hong Kong’s reopening offers exciting growth opportunities for talent and financial institutions around the world.
In addition to severe COVID restrictions, Hong Kong’s prospects as a world-class financial center were also clouded by anti-government protests in 2019 and the introduction of a sweeping national security law a year later.
Mr Lee said Hong Kong is working to attract top talent to offset a major brain drain seen over the past three years due to the pandemic rules.
“Like many other major cities around the world, Hong Kong has seen ups and downs over the years, but our resilience remains remarkably unmatched,” he said at the summit.
Global financial institutions have long relied on Hong Kong as the gateway to China to tap into the world’s second largest economy and its trillions of dollars worth of financial markets.
Foreign banks including Goldman, Morgan Stanley, HSBC and Standard Chartered also have a significant onshore presence in China.
Hong Kong is a “very, very important” financial center for China, China Securities Regulatory Commission (CSRC) vice chairman Fang Xinghai said at the summit.
The authorities are keen to list more international companies in Hong Kong to expand the city’s capital market activities.
According to figures from Refinitiv, Hong Kong’s new stock listings so far in 2022 are worth $10.77 billion, the lowest level since 2017, compared to $37.7 billion at the same time last year.
Global investors have faced several challenges this year, with the Russia-Ukraine war, rising inflation, rising energy prices and rising interest rates weighing on risk appetite.
Goldman Sach’s Mr. Solomon said at the summit it could take up to six quarters for the world to “rebalance” after a period of uncertainty.
“There’s still a significant amount of uncertainty going into 2023,” he said. “My expectation is that the balance will become more balanced in the coming quarters.”
Michael Chae, Blackstone’s chief financial officer, said the geopolitical situation between major economies is a growing risk to the world.
“What’s keeping me awake is the possibility of rising tensions around the world, which could lead to serious threats of instability,” he said.
Morgan Stanley’s Mr. Gorman said the biggest risk facing the world right now is high inflation.
Meanwhile, Colm Kelleher, chairman of UBS Group, said the bank is eagerly awaiting the next step in China’s management of the pandemic, believed to be the toughest in the world.
As part of its zero-COVID strategy, China has continued to impose lockdowns, even for a small number of positive cases, even as the rest of the world has moved towards easing almost all restrictions.
“We are waiting for zero COVID and China opening up to see what will happen,” he said. – Reuters