A recent report from the Economist Intelligence Unit has highlighted the gradual weakening of Hong Kong’s status as a global financial center, with a significant outflow of financial activities. The report analyzed the recent changes in the Asian financial markets and predicted that Singapore stands to benefit from the loss experienced by Hong Kong, attracting a large amount of financial business that is being transferred from Hong Kong.
The report attributed Hong Kong’s decline as a financial hub to pressures from mainland China policies, the US-China trade war, as well as uncertainties in the mainland’s real estate and technology markets, which have negatively impacted investor confidence. Additionally, the decline in Hong Kong’s stock market and slowing economic growth have further eroded its status as a financial hub.
According to the report, the funds raised through initial public offerings (IPOs) in Hong Kong have dropped to the lowest level in 20 years, as many companies have put their listing plans on hold due to subdued market sentiment. While the Hong Kong government has set up a special task force to improve market liquidity, it is anticipated that Hong Kong will increasingly rely on the mainland market in the coming years, leading to a significant weakening of its global financial center status.
The report also mentioned that investors are adopting a “China plus one” strategy, expanding their funds to other Asian markets to hedge against mainland risks. Singapore, with its stable market environment and low tax rates, has attracted some capital inflows. The growth of financial activities in Singapore is expected to benefit from the losses in Hong Kong.