‘Here is the City’ recently wrote an article describing how the New York and Hong Kong financial services markets would outgrow London in four years. If this is the case, this has got to be some positive news for the Hong Kong financial services sector.
The key arguments are sound enough with the article citing internationalisation of the RMB, economic growth in China and a more favourable regulatory environment. However, I think it doesn’t really take into account the challenges that Hong Kong faces against the nearest financial hubs of Singapore and Shanghai, and therefore potentially, the article is solely ‘pinning the tail’ on Hong Kong as many similar arguments could be applied to these other regional hubs.
For example, the Singapore government has significant tax incentives to new employers building out in the region and a recent article suggested that 57% of global multinational companies would consider Singapore over Hong Kong as their regional headquarters, and this is bound to have an impact on the growth here in Hong Kong.
That being said, traditionally, Singapore was seen as a lower cost option as salaries and the cost of living plus corporation tax rates made it favourable. With the strength of the Singapore dollar and the weakness in the greenback, there are many arguments to say that this is now not the case and the cost of living in Hong Kong is on par or even lower than Singapore.
Shanghai will surely become a significantly more mature market in due course with the internationalisation of the RMB and the growth of the domestic banking market, and this too will challenge this statement.
Even so, a 3.5% growth in the total number of city-type jobs in Hong Kong by 2017 to an estimated 277,000 will undoubtedly be good for the financial services market and the regional economy. This is a good thing for financial professionals in the Hong Kong market and those looking to move to Asia for their next career opportunity! However, it will put a significant pressure on the talent pool and the ability for financial services organisations to attract and retain their employees.