The heads of top investment banks and asset managers from across the world will converge on Hong Kong next week, for a summit that is being seen as the city-state’s comeback as a global financial hub.
And aside from Hong Kong’s emergence from Covid-19 disruptions and Beijing’s regulatory crackdown — key factors behind the region’s fall from grace — the summit is set to focus on China’s bumpy post-pandemic recovery and geopolitical tiffs with the West.
“The structural slowdown in China’s economy, the omnipresent risk that US-China relations might take another leg down in the future, the questions about whether private mainland money now prefers Singapore, none of that has really changed,” said Chris Beddor, Gavekal Dragonomics’ deputy China research director based in Hong Kong.
“And senior people in the financial sector are keenly aware of those issues, even if they don’t discuss them publicly.”
In attendance at the summit will be Goldman Sachs Chief Executive David Solomon, Morgan Stanley boss James Gorman, Citigroup’s Jane Fraser, as well as HSBC’s Noel Quinn and Standard Chartered’s Bill Winters.
The heads of Blackstone Group, Carlyle Group, Citadel and others will also speak at the event, which focuses on the main theme of “living with complexity”.
“The main question in the mind of everybody when they come to Hong Kong is how is the Chinese economy performing and what would be the swings coming from there,” said Diana Parusheva-Lowery, head of public policy and sustainable finance at the Asia Securities Industry & Financial Markets Association in Hong Kong.
China dealmakers lose positions
The finance chiefs are coming to Hong Kong following hundreds of lay-offs in banking and asset management in the city-state.
Key drivers of the job cuts include the slowdown in China dealmaking and Beijing’s tightened regulatory grip on the market.
Goldman Sachs, Morgan Stanley and JP Morgan have trimmed dozens of bankers based in Hong Kong and mainland China this year, with key China dealmakers among those laid off.
The surprise merger between Swiss banking rivals UBS and Credit Suisse resulted in a brutal 80% reduction in the Credit Suisse investment banking staff in Hong Kong in August.
Canada’s largest pension fund CPP Investments also cut a number of Hong Kong-based staff members.
Huge declines in IPOs, trading volumes
The region’s financial job market, which saw an exodus of foreign employees during Covid, is unlikely to recover in the near term amid a challenging operating environment, recruiters and industry insiders say.
But hiring in private banking remains active, helped by wealth coming out of China to Hong Kong after the border reopened, John Mullally, the Hong Kong managing director of recruiter Robert Walters, said.
Hong Kong needs to be aware of competition from rival financial hub Singapore but Mullally expects the city-state to “regain some of the ground lost” despite the depressed dealmaking and trading.
The Hong Kong Stock Exchange is only the 11th-largest venue for initial public offerings this year, with merely $2.7 billion raised through the third quarter.
That is a mere shadow of its top position in most of the last decade when Hong Kong was seen as the darling of the global financial industry.
The territory’s assets under management fell by 14% in 2022, official data showed.
Trading volumes have also slumped as foreign investors reduce exposure to a China they view as increasingly isolated by its opaque policies, struggling property sector and crackdowns on private enterprise.
- Reuters, with additional editing by Vishakha Saxena