Flight from Hong Kong raises fears for financial hub
After Hong Kong was ravaged by protests, Cindy stayed loyal to the place she called home, clinging on to her job in the commercial hub’s financial district.
But when China’s Communist government passed a sweeping national security law to punish protesters and bring the city in line with the mainland, including censoring what teachers could say in classrooms and suppressing media outlets, she knew time was up for her and her children.
“I think the main reason for most people leaving Hong Kong is the future of the next generation. They don’t want their kids to grow up in this kind of environment,” says Cindy, in her early 30s, who is now living in Spain.
“I don’t think I would have a family in Hong Kong if I still lived there ... because of the education. The politics has an influence on everything in your life.”
One month ago, she packed up her life in Hong Kong. Many friends and former colleagues have also left the city for destinations such as Taiwan, and her family members are also planning to leave.
Some people have sold properties and opened overseas bank accounts, for fear of not being able to get their money out of the city under potential future capital controls. Cindy always wanted to try living abroad, but was prompted to do it sooner by “the uncertainty, the insecurity about the next change in policies. You don’t know. That’s made people want to leave now”.
That uncertainty over how Beijing will fundamentally change Hong Kong clouds over its future as a financial hub, which stands central to its identity and relevance on the international stage. It has raised the question of whether foreign multinational businesses will still be able to flourish in Asia’s World City. Last year, the Hong Kong Stock Exchange ranked as the world’s second-largest IPO market, raising a total of HK$389.9billion (£36.3billion) from 140 listings, according to KPMG, and beaten only by New York’s Nasdaq.
On Thursday, the city was removed from the annual Heritage Foundation index of the world’s freest economies, a list it has topped for all but one of the past 26 years. It was a source of pride for the local government, which would send out official press releases congratulating itself on its reputation. The authors said that while Hong Kong “offers their citizens more economic freedom than is available to the average citizen of China … developments in recent years have demonstrated unambiguously that those policies are ultimately controlled from Beijing”.
Many worry the city’s sweet spot for international business – of a separate political and legal system left over from British rule, yet sitting just 30 miles south of mainland China – will come under threat.
Polling by Lynton Crosby’s CT Group of Cantonese-speaking locals in the week from Jan 23 – seen exclusively by The Sunday Telegraph
– found financial service professionals thought it less likely that expats would move to, and foreign companies invest in, the city over the next few years.
More than 60pc of members who responded to a survey by the American Chamber of Commerce in Hong Kong thought the city’s business environment was unstable and had worsened in the past 12 months, pointing at the new law and Covid-19 as main concerns. Less than a quarter thought it would get better over the next year.
While most businesses expected to keep Hong Kong as their regional headquarters for the next three years, the survey found businesses were downsizing because of concerns about its future as a major financial centre, as well as cost cutting reasons.
Just under half of all respondents were worried about the effect Beijing’s tightening political grip would have on doing business over the next 12 months, while a third felt the city had become less competitive as an international business hub.
Despite concerns and behind-thescenes risk assessments, the vast majority have stayed silent on the implementation of the national security law, for fear of retribution. Many executives declined to speak to The Telegraph for this story, fearing repercussions.
However, Beijing’s crackdown – as well as the Covid-19 pandemic separating expats from their families at home – is a catalyst for Hong Kong’s changing composition as a cosmopolitan city.
Many simply don’t want to raise their families in modern Hong Kong.
A local banker, who spoke on the condition of anonymity, left a sixfigure salary to come to the UK under the British National (Overseas) visa, which allows some Hongkongers to work and study Britain. He was primarily motivated by concerns about his children’s education.
“Hong Kong has fallen out of favour in terms of a place individuals want to relocate to,” according to one financial services recruiter. “Three years ago, you could call someone up in London, New York ... and most people would have entertained the conversation.”
“Whereas now, especially most people in the West – America and in the UK – if they’ve been watching the western coverage of the Hong Kong protests, that has been putting a lot of people off.”
They said the family-friendly environment in Singapore was acting as a pull for candidates.
All eyes are now on whether Hong Kong’s judiciary loses its independence for multinationals to feel safe in taking disputes to arbitration or writing contracts. That, say business leaders, would be a gamechanger.
More than a dozen financial services professionals based in the city were interviewed, all of whom agreed that Hong Kong’s importance as a gateway into China would remain until its judicial independence broke down or China’s financial markets opened up.
“Critically there has to be somewhere else for business to go and I think that would require the global markets to have confidence in the alternative mainland stock exchange, including robustness of infrastructure, reporting, legal system, listing rules, the requirements around due diligence of IPOs,” said a partner at one of the “Big Four” accounting firms in the city.
“Either Hong Kong continues in the long term, or somewhere else is sufficiently liberalised to replace it. But none of that happens anytime soon, which is I think the final conclusion of why we don’t see [Hong Kong] going away [as a financial hub] and it needs to continue to play its role.”
‘I don’t think I would have a family in Hong Kong if I still lived there. The politics has an influence on everything in your life’