The security law is just the latest challenge for foreign banks operating in Hong Kong, following increasing distrust of foreign companies, the CCP virus outbreak in nearby mainland China, and ongoing protests and police violence that have defined the city over the past year.
The trend is stark looking back over the past seven years, as the numbers of bankers at foreign firms have fallen by around 300 while those at Chinese banks have swelled by more than 1,100. Those numbers represent bankers, traders, and other finance professionals licensed by Hong Kong’s Securities and Futures Commission.
For example, Deutsche Bank’s long-serving Hong Kong-based head of Asia Pacific, Werner Steinmueller, retired in July. His replacement, Alexander von zur Muehlen, will lead the company’s Asia operations, not from Hong Kong, but from Singapore.
A banker in Hong Kong who wished to remain anonymous recently told The Epoch Times that some senior leaders at Wall Street banks have already departed Hong Kong or announced their retirement months ago, a sentiment that’s corroborated by HR recruiters.
US Delisting Threat Drives Hong Kong ActivityHong Kong Exchanges and Clearing (HKEX), which runs the main Hong Kong Stock Exchange, believes the ongoing U.S.–China economic row would bolster its prospects. The Trump administration’s consideration of delisting Chinese companies traded in the United States could force such companies to pursue a secondary listing in Hong Kong as a defensive measure.
Fifty-nine companies sold new shares in Hong Kong during the first half of 2020, raising $11 billion, making it the third-busiest bourse in the world in total proceeds, behind Nasdaq and the Shanghai Stock Exchange, according to data from financial services firm EY.
During the second quarter of 2020, Chinese tech giants JD.com and NetEase—whose shares are mainly listed in New York—raised over $6 billion combined in Hong Kong via secondary listings.
JD.com, China’s second-biggest online retailer, raised approximately $3.9 billion from the stock sale in June, which was the largest equity raise in Hong Kong so far in 2020. NetEase, a major mobile game publisher, sold around $2.7 billion in stock, also in June.
Business leaders mostly downplayed the increased scrutiny abroad for listing in Hong Kong. NetEase CEO William Ding wrote in a letter to shareholders that “returning to a market that is closer to our roots” was part of the reason for going to Hong Kong.
The spate of mainland Chinese companies “returning home” to sell their stock in Hong Kong does little to alleviate such fears.