Hong Kong risks its global financial status due to Covid isolation

In the past two months, the business and financial circles have been more outspoken about the Hong Kong government’s policies than the two years of political and social turmoil.

The slow launch of the Covid-19 vaccine, coupled with the failure to formulate an exit plan for the pandemic, eventually ignited a fire under bankers in the territory.

Hong Kong’s financial services industry has always enjoyed a gold-plated status, contributing more than one-fifth of the GDP each year. Approximately 70 of the world’s 100 largest banks operate in Chinese cities, and so far, most of them are not affected by Beijing’s tightening of Hong Kong’s control.

Now the bankers are disgusted. It has only been more than 100 days since Hong Kong launched the vaccine, and only about 17% of adults — and less than 5% of people over 70 — have come forward. This is half of London and Singapore.

The disappointing vaccination plan has been hampered to a certain extent by the general distrust of the government, dashing Hong Kong people’s hopes of international travel, which may not be until next year. The border is still closed to foreign tourists, and the two- or three-week punitive hotel quarantine of returning residents has resulted in a de facto blockade, and it is now in its second year.

Although the government is working to increase vaccination rates, it has not yet linked its plan to the strategy of reopening the border. This leads people to worry that when Europe and the United States reopen this summer, the city will be left behind. This is a critical moment in its reputation as a global financial center.

“We are actually sending a signal that we have closed business,” a Wall Street banker in Hong Kong said this week. “Hong Kong’s status as an important financial center is being questioned.”

Frederik Gollob, chairman of the Hong Kong European Chamber of Commerce, said that the segregation regulations mean that “Hong Kong may lose its competitive advantage in attracting top talent” and people have “leaved forever”.

Even HSBC, Burned before By issuing opinions on Hong Kong’s policies, the government is urged to “maintain public health and allow business travel to gradually return to normal.”

By standing out from the pandemic, Hong Kong has fallen into a compelling experiment: How long can an international financial center survive without traveling abroad? How long will its huge expat community endure being unable to go abroad? If there is no business trip or tourism, how long can airlines and hotels last? The government has not yet set a timetable for these companies and individuals to plan ahead.

Hong Kong Chief Executive Carrie Lam said that she would not “sacrifice the safety of the people of Hong Kong in a hurry to reopen the border.” But like other places that have successfully suppressed the virus (only 210 of Hong Kong’s population of 7.5 million have died), Hong Kong is now at risk of falling into a purgatory of small-scale outbreaks and extreme restrictions. Due to the increase in cases, the proposed travel corridor with Singapore has been postponed twice.

The manager of the largest international bank in Hong Kong is Brief excitement Last week, the government announced that up to four executives from a company can enter the country by air every month without isolation. Since then, small fonts have suppressed market sentiment. It revealed that they will have to return to the quarantine area at the end of each day’s meeting. “It’s like the daytime release of prisoners,” said David Webb, a high-profile activist investor.

At present, Hong Kong has enthusiastically resumed the vaccination campaign. The local newspapers were full of advertisements.Encourage companies Do your part. Vaccine bookings are climbing.

However, companies are still confused about Hong Kong’s goals. Is it to reopen to the world before competitors in Asian business centers such as Singapore, or to open the border with mainland China? If it is the latter, Hong Kong will follow Beijing’s timetable for reopening international travel. This may mean a much longer delay than making travel decisions for Hong Kong alone.

Hong Kong has only Approved travel exempt from quarantine Government officials and executives of major Chinese companies such as Tencent and Alibaba. For some in the international financial community, this is a signal that Hong Kong has accepted its destiny as China’s global financial center, and China faces the risk of over-reliance on Chinese capital.

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About the Author: Agnes Zang