Amid geopolitical tensions and China’s economic slowdown, global investment bank and asset management bosses are getting back together in Hong Kong next week in an attempt to reposition themselves in the second-largest economy in the world and its offshore financial hub.

The Hong Kong Monetary Authority is hosting the Global Financial Leaders Investment Summit, a premier event that starts on Monday. Notable attendees include James Gorman, the CEO of Morgan Stanley, Jane Fraser of Citigroup, Noel Quinn of HSBC, and Bill Winters of Standard Chartered.

Speaking at the event, which has “living with complexity” as its central topic, are the leaders of Blackstone Group, Carlyle Group, Citadel, and other organisations.

Executives are arriving in Hong Kong at a time when the city has lost hundreds of jobs in asset management and banking due to a slowdown in Chinese dealmaking and stricter regulations imposed on the industry since the first summit last year. The purpose of the meeting was to announce Hong Kong’s return as a major international financial centre after the COVID-19 pandemic’s interruptions.

“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.

With just $2.7 billion raised in the third quarter, the Hong Kong Stock Exchange is only the 11th largest venue for initial public offerings this year—a far cry from its top spot for the majority of the previous ten years. According to official figures, the territory’s assets under administration decreased by 14% in 2022.

As international investors lessen their exposure to China, which they perceive as becoming more isolated due to its opaque rules, faltering real estate market, and crackdowns on private enterprise, trading volumes have also plummeted.

“The structural slowdown in China’s economy, the omnipresent risk that U.S.-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,” Beddor said.

According to recruiters and industry insiders, Hong Kong’s financial job market—which saw a flight of foreign workers during COVID—is unlikely to rebound anytime soon due to a difficult operating climate.

This year, Goldman Sachs, Morgan Stanley, and J.P. Morgan have reduced the number of bankers they have on staff in Hong Kong and the Chinese mainland. Notably, among those let go are important China dealmakers.

In August, Credit Suisse’s investment banking personnel in Hong Kong was brutally reduced by 80% as a result of the unexpected merger between rival Swiss banks UBS and Credit Suisse.

CPP Investments, the biggest pension fund in Canada, also let go of several employees who were stationed in Hong Kong.

The recruiting in private banking is still going strong, according to John Mullally, managing director of Robert Walters’ Hong Kong office. This is because wealth is still flowing into Hong Kong from China following the border’s reopening.

Mullally believes that despite the downturn in dealmaking and trade, Hong Kong will “regain some of the ground lost” and that Hong Kong must be mindful of competition from rival financial powerhouse Singapore.

(Adapted from NewsWav.com)

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