Given the political atmosphere in Hong Kong, will it remain the main financial hub?
What other Asian cities would be contenders to take the place of Hong Kong?
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Singapore
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That is what I expected, but I was speaking with an Asia based BB employee who believed that the banks could head for mainland China rather than continuing to funnel most work through Hong Kong.
HK will continue to be the venue for trading Chinese stocks
Companies are still very willing to list in US.
China is actually encouraging state affiliated companies to do their transactions in HK. They pitched the national security law to HK tycoons as a mean to restore confidence so that China will continue to invest in HK.
Also, private companies in China are also considering to move to or dual list in HK. Mainly because listing only in US could be a risk to them due to the political sentiments.
While deals are going to be based in HK, I would say headcounts will gradually shift to China. It has always been BBs strategy but they just cannot do it due to lack of sole control and "talent" (bankers re willing to move to PE in China because its prestigious, but not BB IBD in China due to tax).
With new wholly owned brokerage license in China, banks are going to expand their on the ground presence. You probably want most of your bankers based in SH BJ instead of flying from HK. Once this gained traction then it will be a supply side problem. Openings are in BJ, bankers just cannot choose to stay in HK.
Agree, I have talked to several junior mainland Chinese bankers in HK and they are reluctant to move back to BJ or SH because of tax. The appeal of low tax and fixed peg to USD in HK really can't be understated.
Foreigners are probably less reluctant to move to HK for the time being until we know how draconian this law will really be but hiring has become significantly localized anyways.
Also, Singapore is very unlikely to be a hub for PRC related investment banking deals.
They may increase their slice in S&T but probably not IBD or PE. Few mainland bankers are willing to relocate to SG. You just don't have the supply of experienced China coverage IBD bankers in HK. They would rather return to BJ SH.
Also, you probably don't want to waste so much time flying from SG to BJ SH for DD and management meetings.
It seems that way.
The BB I work at and the BB my buddy works at are both doing a lot of hiring in their HK offices, primarily in ECM groups. HK is still the primarily market for large cap Chinese companies.
For China coverage I think HK will still continue to dominate.
There are a number of funds that run SE Asia and even India coverage from HK, I could see that changing and more of a shift to Singapore, which logistically makes more sense as well.
Any thoughts on Japan? Financial Times ran a series of articles recently and they seem mostly focused on Singapore vs. Japan (although most commentators think Singapore is much more likely).
To be honest Tokyo has no chance of replacing HK. There's a reason that even to this day that all bulge brackets have an APAC ex-Japan division and a separate Japan division. Language, culture and taxes are keeping Japan overly insulated and will continue to do so.
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