Hong Kong’s traditional growth pillars are teetering, but the city can rely on an old staple — banking.
The economy is being squeezed by China’s weakest growth in a quarter century and a strengthening currency that’s pegged to the US dollar, reducing export competitiveness.
Tourist arrivals are dropping, luxury goods stores closing, and an imminent increase in US interest rates threatens to undermine home prices that have surged more than 350 percent from their low in 2003.
With manufacturing long gone, that leaves the US$300 billion economy headed more toward a growth model resembling Switzerland’s than its Asian Tiger roots, Bloomberg reported.
As China opens its markets to the outside world and the number of the region’s wealthy surges, much of the process will happen through Hong Kong, Kelvin Lau, a senior economist at Standard Chartered Plc, was quoted as saying.
“Banking and finance will remain a very important pillar for Hong Kong’s economy over the next five to 10 years,” Lau said.
Brian Li, deputy chief executive at Bank of East Asia Ltd. (00023.HK), told the news agency: “We are seeing a lot of mainland Chinese individuals coming to Hong Kong, opening bank accounts, buying wealth management products and buying insurance products.”
Hong Kong — home to the Asian headquarters of HSBC Holdings Plc (00005.HK) and host to investment banks and private wealth managers including UBS Group AG and Citigroup Inc. — could become like Monaco, Liechtenstein or Switzerland, deepening its role as a safe harbor for the region’s rich, Keith Pogson, a senior partner for financial services at Ernst & Young in Hong Kong, was quoted as saying.
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