Exodus from Hong Kong: the government’s report on the financial sector bypasses the main reasons for expatriate departures | Asset owners

The Hong Kong government’s public relations machine is fighting a growing chorus of negative publicity about the number of people in the financial community leaving the territory.

Banks and asset managers from the United States, Europe and Australia are all expected to reduce their operations in Hong Kong as the territory maintains its strict travel and quarantine restrictions.

A 21-day quarantine for international arrivals (reduced last week to 14 days) and a ban on flights from the UK and US have hampered their ability to manage and grow their business in Asia from a base in Hong Kong.

Hong Kong’s population decreased by 1.2% between mid-2020 and mid-2021, with more than 75,000 people leaving the city, according to the Hong Kong Census and Statistics Department. Visa applications for the financial services sector decreased by 23% in 2021.

One in four members recently surveyed by the American Chamber of Commerce in Hong Kong said they were likely to leave. Most cited restrictions on international travel as the main factor.

The European Chamber of Commerce also weighed in, predicting that if Hong Kong continues to be cut off: “We anticipate an exodus of foreigners, possibly the largest Hong Kong has ever seen.”


The Covid situation combined with the erosion of basic freedoms imposed by the National Security Act (NSL) has created a perfect storm that threatens Hong Kong’s status as the region’s preeminent financial hub.

Companies have been reluctant to comment on their contingency plans for fear of disrupting relations with Beijing, but with so much activity behind the scenes, moving staff to Singapore and Australia, the information had to come out.

“This place is sheer madness – so many people are leaving. Even Bank of America just announced a huge downsizing to shake things up,” a Hong Kong-based senior finance executive told AsianInvestor.

Various global media reported this week that Bank of America, the second-largest US bank by assets, has begun a review of its Hong Kong operations to identify workers who can be relocated to Singapore. Another American bank, Wells Fargo, is also seriously considering setting up in Singapore.

Faced with this exodus, the Financial Services Development Council (FSDC) of Hong Kong has just published the conclusions of a survey senior executives. Interviews were conducted with 30 leaders in the financial sector, including the emerging fintech field, where Hong Kong hopes to rival neighboring Shenzhen.

Respondents indicated that recruiting the most qualified candidates from overseas was becoming increasingly difficult. Other rival centers such as Singapore, Seoul and Tokyo were also seen
positioned and increasingly keen to compete with Hong Kong.

Singapore is the obvious alternative destination, with low corporate and income tax rates, but the report says residential work permits can be difficult to obtain.

“While it is clear that international institutions currently operating under Hong Kong’s jurisdiction,
do not yet plan to leave en masse, they are eagerly awaiting political answers
who answer their questions about Hong Kong’s ability to maintain its position as a world-
class financial center.

The report says that Illustrates Hong Kong’s future as a credible financial center “is not seen as dependent on political developments.” This remains open to question; Covid will hopefully die out eventually, but not the NSL.


The FSDC report does not even mention the NSL and, in this regard, the report is significant as much for what it does not say as for what it does.

For example: “international institutions… are not yet planning to leave en masse” – without explaining why they might actually consider this.

Or: “The challenge will be to find ways to ensure that Hong Kong continues to be a popular posting for expats” – without explaining why this is a problem.

The report said respondents were confident that Hong Kong’s position would remain stable, at least in the medium term, “and looked to a number of fundamental financial forces that would continue to play a valuable role in securing Hong Kong’s future. Hong Kong; the continued existence of the rule of law, a favorable tax system, an independent judiciary and well-functioning markets.

“I’m afraid the rule of law will be undermined and if it gets worse, it’s game over (for Hong Kong),” said the senior financial industry executive to whom AsianInvestor spoke.

Three aspects of the current situation are of concern to survey respondents: the high costs of doing business in Hong Kong, competition for talent, and barriers to small businesses, particularly in fintech.

It has been widely agreed that a major drawback of having a presence in Hong Kong is the cost of establishing and maintaining business operations, particularly the high costs of commercial and residential real estate.

“However, given the benefits of being based in Hong Kong, these costs are considered worth absorbing.”


Given the stark reality of widespread disillusion among many long-time expats in Hong Kong, it’s no surprise that many disagree with the report’s findings.

“It is not true to say that no fund management company is planning to leave Hong Kong, go elsewhere or leave the region,” said veteran fund industry executive Stewart Aldcroft. Asian investor.

“It would be likely that most companies are not currently interested in expanding their presence in the Hong Kong market. They could still look to open in China, Singapore, Taiwan or Thailand, all of which are attractive places for the community. fund managers because sales volumes and opportunities are good,” he added.

Aldcroft acknowledges that Hong Kong will struggle to be a popular choice for Western expats as things stand.

“Singapore is much better at public relations and media management than Hong Kong, but it has many similar restrictions and, in some cases, more draconian policies. The Hong Kong government really needs to do something to improve the public image projected around the world, but I suspect that is unlikely to happen until the Covid affair is nearly over and a some degree of normalcy is returning.

A Hong Kong-based financial services executive, whose family is overseas awaiting the lifting of Covid restrictions, gave AsianInvestor his personal perspective.

“The quality of life in Hong Kong for my family has deteriorated to such an extent that they have little desire and incentive to return.

“I still believe in Hong Kong for business, but the landscape has changed so much that where it once ticked the boxes both professionally and personally is no longer the case. It puts greater personal pressure which may affect the decision of some to stay or not.

Comments are closed.