HK's status as global financial hub enhanced amid Western banking woes, 'reaffirming confidence in city under One Country, Two Systems'
City expected to increase global capital appeal thanks to support of Chinese mainland
Published: Mar 24, 2023 11:03 PM
Aerial photo taken on May 29, 2022 shows a view of the Two International Finance Centre in Hong Kong. Photo:Xinhua

Aerial photo taken on May 29, 2022 shows a view of the Two International Finance Centre in Hong Kong. Photo:Xinhua

More than 100 decision-makers from global family offices and their professional teams gathered at a wealth summit in the Hong Kong Special Administrative Region (HKSAR) on Friday. The popularity of the event further underscored the Chinese city's appeal as a world-leading international asset and wealth management hub and its long-term promising prospects amid an unfolding bank crisis in the US and Europe, which have been left reeling from financial chaos and a slew of bankruptcies.

Analysts said that global investors have again "voted with their feet" on the financial stability of Hong Kong, which is greatly supported by the financial stability of the market and policies of the Chinese mainland. Investors from around the world will be able to access an increasing number of new investment areas in the Chinese mainland through Hong Kong, which serves as a financial bridge linking the mainland and global capital markets.

The Wealth for Good in Hong Kong Summit (WGHK) held on Friday brought together more than 100 decision-makers from across Hong Kong, the Chinese mainland, North America, Europe, other Asian regions, the Middle East and around the world, according to the HKSAR government.

Paul Chan Mo-po, Financial Secretary of HKSAR, said under the One Country, Two Systems principle, Hong Kong has a common law regime and a regulatory system that aligns perfectly with global standard.

"Our world-class financial infrastructures plus a diversified and efficient capital market that connects the mainland and the global capital markets put us in the forefront as a leading asset and wealth management hub in the world," Chan said, noting that the solid development in green and sustainable finances, innovation development, art and culture industries as well as philanthropy makes the city an ideal base for global family offices.

Stephen Phillips, Director-General of Investment Promotion at InvestHK, said that "The WGHK will open up a world of new opportunities for family offices from around the globe. Hong Kong's fast-moving, dynamic business and cultural environment has shaped a unique East-meets-West center for international cultural exchange,"

"This aligns well with Hong Kong's role as a critical bridge, seamlessly connecting the Mainland and global capital markets," Phillips said.

"Such a large number of international financial institutions and experts attending the event in Hong Kong not only reflects their confidence in the city as an international financial center but also their optimism in China's economic development prospects," Liang Haiming, chairman of the China Silk Road iValley Research Institute, told the Global Times.

A pedestrian walks past a bank's digital screen displaying the Hang Seng Index in Central district of Hong Kong, south China, Jan 19, 2021. Photo:Xinhua

A pedestrian walks past a bank's digital screen displaying the Hang Seng Index in Central district of Hong Kong, south China, Jan 19, 2021. Photo:Xinhua

Unique advantages

Facing the current turbulence of the external market environment, from the collapse of Silicon Valley Bank to the crisis at Credit Suisse, Hong Kong's financial industry has shown its unique advantages and huge potential for growth.

Hong Kong stayed in the fourth place out of 120 assessed financial centers in the Global Financial Centres Index Report published on Thursday, showcasing the financial competitiveness of the city.

For international investors, where there is stability, there is opportunity, and Hong Kong obviously showed a status of stability amid Western financial woes, Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times on Friday.

"I think the crisis and chaos in the US and European banks will last for a year or two," said Dong.

As one of the world's financial centers, Hong Kong is the largest cross-border private wealth management center in Asia, and its diversified products can meet personalized asset allocation needs, an industry insider surnamed Yang who closely follows Asian capital markets told the Global Times.

Hong Kong will overtake Switzerland to become the world's largest cross-border wealth management center by asset under management in 2023, with a compound annual growth rate of 9 percent between 2020 and 2025, according to the Global Wealth Report by BCG issued in June 2021.

Liang projected that Hong Kong's capital market will rebound in 2023, with the proceeds raised via IPOs expected to jump over 100 percent year-on-year. That will help the city return to its place among the top three global IPO hubs and cement its standing as an international financial center.

International agencies are also confident in the growth of Hong Kong's financial market in 2023.Total fundraising in Hong Kong will rebound in 2023, reaching between HK$180 billion ($22.9 billion) and HK$200 billion - nearly double the figure for 2022. A peak in interest rates, abundant funds and huge investment needs for corporate development will stabilize capital markets, read an analysis by PwC published in January.

PwC also forecast that the Hong Kong market will regain its place among the world's top three fundraising markets in 2023.

Hong Kong is expected to remain one of the top listing destinations in 2023, according to KPMG's report, Chinese Mainland and Hong Kong IPO Markets 2022 Review and 2023 Outlook, released in December.

With its diversity of capital market financing, Hong Kong will maintain its leading position in IPOs, investments, commercial real estate investment trusts and other financial services, said analysts.

Hong Kong File Photo: VCG

Hong Kong File Photo: VCG

Backed by the mainland

Hong Kong is expected to further enhance its international appeal in the increasingly fierce global competition for capital thanks to the huge Chinese mainland market. Multiple studies have identified the Chinese mainland as the global driver for investable wealth in the next few years.

The city has acted and will continue to act as a bridge for international investors to seize opportunities in the mainland's booming market and new investment areas, analysts said.

"Our country supports Hong Kong in strengthening its position as an international asset management center. The HKSAR government has continued to enhance Hong Kong's competitiveness as an international asset and wealth management center through a series of reform measures," said Chan, HKSAR's financial secretary.

Dong also echoed Chan's view, saying that Hong Kong's stability is still dependent on the Chinese mainland's macro and financial policies. In particular, the mainland's overall stability and room for economic growth are evident, which is an outstanding achievement amid high inflation, financial chaos and risks of economic recession in the West.

Thanks to the country's 14th Five-Year Plan (2021-25), the dual-circulation development strategy and the Guangdong-Hong Kong-Macao Greater Bay Area, there are great investment opportunities in Hong Kong, Liang said.

"The international financial community will enjoy considerable yields by investing in Hong Kong, as well as massive dividends from the stable economic development of the Chinese mainland, as they can buy mainland companies' shares in Hong Kong," he said.

KPMG's December report also pointed out that with supportive government measures gradually taking effect, China's economy will continue to remain on a steady recovery track, creating a favorable environment for fund-raising in 2023.

The Chinese mainland and Hong Kong IPO markets have performed relatively well amid a broader environment of geopolitical and economic uncertainty in 2022, the report said.