19 January 2019
Whether Hong Kong can maintain its advantages will be key to its development as a financial hub. Photo: AFP
Whether Hong Kong can maintain its advantages will be key to its development as a financial hub. Photo: AFP

Has Hong Kong become stronger as a financial hub since handover?

I have been interviewed by the mainland media recently about my views on the achievements and limitations of Hong Kong since its return to China two decades ago.

The questions have been mainly about four areas.

First, Hong Kong has been promoting itself as Asia’s world city since 1997. Obviously, finance and business are one of the most important considerations.

As an international financial hub, is the competitive advantage of Hong Kong getting stronger or weaker? Has Hong Kong become more internationalized or more geared toward China instead?

Second, has Hong Kong acquired any unique advantages since the handover?

Third, what role has Hong Kong played as a connector between mainland China and the rest of the world in the financial sector? Can it do more in this aspect?

Fourth, what challenges has Hong Kong’s financial sector gone through over past two decades? What are the future opportunities and challenges?

I will share my answers to those questions in my upcoming articles. Anyway, whether Hong Kong can maintain its advantages will be a key topic given that the mainland and Hong Kong have been increasingly integrated with each other.

The interconnection is like two sides of a coin. Moody’s Investors Service cut China’s sovereign rating by one notch last week, followed by a downgrade of Hong Kong. The credit ratings of all Chinese SOEs and private firms might be affected. That means mainland and Hong Kong corporates may face rising debt costs in the future.

Meanwhile, China is in the middle of a structural reform. And the authorities are pushing for deleveraging in the financial sector, which is set to tighten market liquidity.

However, that’s just a temporary situation, and it does not mean China’s economy is heading toward a sustained adjustment and slowdown.

This article appeared in the Hong Kong Economic Journal on May 29

Translation by Julie Zhu

[Chinese version 中文版]

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Senior investment banker

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