Hong Kong’s bankers have been feeling a bit insecure, worried that the city will lose its status as Asia’s most prominent financial hub, and they will lose their well-paying jobs.
Flashy news headlines certainly did not help. In 2018, the neighboring tech hub Shenzhen, once a rural backwater, surpassed the Hong Kong economy for the first time. In 2021, Shanghai became the region’s top initial public offering destination. Last year, the number of family offices operating in Singapore soared, as the two cities diverged on Covid policies.
So where does Hong Kong stand if aspiring entrepreneurs can solicit venture capital in Shenzhen, go public in Shanghai, and have their new-found wealth managed in Singapore? It appears the city is in an irreparable decline.
Fear not. As China reopens its borders and travel resumes, the city will quickly repair its reputation and reclaim its throne.
Too much attention has been paid to the ultra-wealthy who shunned Hong Kong for Singapore, and not enough to China’s upper middle class. Those folks in the north do not have access to finance circles in London or Dubai, and are feeling so frustrated with their options that Hong Kong comes across as a financial haven.
In China, an astonishing two-thirds of family wealth is tied to property, but the need for diversification is always there. By 2020, mainland investors owned $2.2 trillion in offshore assets, from mutual funds to insurance products, according to Bloomberg Intelligence.
There are few other good choices at home. Deposit rates are set artificially low by state-owned banks. Money market alternatives, such as Ant Group Co.’s flagship Yu’e Bao, fell out of fashion as the government raised eyebrows over its outsized influence in this important financing channel. So did other popular but riskier ventures, such as peer-to-peer lending and trading of cryptocurrencies.
In other words, just when you think you figured out a good way to invest, the government’s regulatory crackdowns took that option away. People have become so frustrated with wealth management that amid the housing market slump, they simply use their excess savings to speed up mortgage repayments.
Read More at https://www.bloomberg.com/opinion/articles/2023-02-17/hong-kong-s-edge-over-shanghai-singapore-is-china-s-wealth