China envisions Hong Kong’s capital markets as a beacon of prosperity, having lifted the city out of social chaos in June 2020. This week, Beijing backed that goal with vocal support at an investment summit attended by CEOs of global banks and money managers.
Do global investors share the optimism?
The question has never been more pertinent as the US ushers in president-elect Donald Trump in January. His economic policies will roil global markets, based on campaign speeches. Hong Kong, caught in the crosshairs of the US-China spat in his first term, should be preparing for a repeat, according to popular predictions.
At play is HK$32 trillion (US$4.1 trillion) of assets managed by local and global funds, as well as private banks in the city, according to government data. The stake is surely far higher, with trillions of dollars sloshing in Asia-Pacific, eyeing the potential rewards in the capital markets on both sides of the city’s border.
The world’s biggest lenders including JPMorgan Chase, Bank of America, Citigroup, HSBC and Mitsubishi UFJ Financial Group, are counting on China for growth, with thousands of employees based in the region. Bridgewater Associates and BlackRock are also banking on a turnaround in one of the cheapest stock markets worldwide.
“People are leery of investing a lot of money in a country that is part of geopolitical tensions,” said co-chairman Howard Marks, whose Los Angeles-based firm manages US$205 billion of assets. “China is still trailing other markets. It’s still an unpopular market. [But] the best values are usually found in unpopular markets.”
