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Hong Kong must embrace Middle East capital, mainland China culture, to bolster role as financial centre: industry leaders

Amid geopolitical tension between China and the US, Hong Kong needs to look beyond US markets and court the Middle East as a source of capital as it seeks to burnish its position as an international finance centre, according to the chairperson of the Chamber of Hong Kong Listed Companies.

“I think we have an issue in Hong Kong today, in the fact that despite the infrastructure [in the financial system], there is a lack of capital flow coming from the US,” Catherine Leung, who is also co-founder and partner with MizMaa Ventures, said at a conference on Tuesday. “[The US] represents the biggest and the deepest pool of capital in the world.”

Hong Kong needs to be proactive in finding other sources of capital if the city wants to be an international financial centre, and not just a financial centre, Leung added during a panel discussion at the Post’s China Conference at the St Regis hotel.

“There is some hedge fund money from the US, but not much,” she said. “And so, we are caught in the geopolitics of it all … I think the Hong Kong government, if I may say so, needs very urgently to have a Middle East strategy.”

(L to R) Peggy Sito, deputy business editor at South China Morning Post, Lyndon Chao, Catherine Leung, and Rocky Tung, engage in a panel disussion during the South China Morning Post’s China Conference at The St. Regis Hong Kong in Wan Chai on June 20, 2023. Photo: May Tse

The government needs to establish a system in the Middle East and work to develop long-term relationships, because sources of capital there will not just “give you money”, she said, adding that two-way partnerships are preferred.

Hong Kong also needs to stop hesitating over what Beijing may or may not want in terms of policy, and should instead embrace its history as an open financial centre, said Lyndon Chao, managing director and head of equities and post trade with the Asia Securities Industry & Financial Markets Association.

Based on recent meetings with the CSRC (China Securities Regulatory Commission), “the doors are open, regulators are very constructive and the market will continue to be open”, Chao said.

“[Beijing] wants Hong Kong to grow, they want Hong Kong to be capitalistic,” he added.

But now it’s up to Hong Kong, he said. Rather than thinking about what Beijing may think, “be yourself”, he advised. “Be the international financial centre that you’ve been for decades.”

Hong Kong must also continue to embrace English to maintain its role as an international finance centre, Chao argued, noting that during his career he has noticed a decline in English usage in the sector in Hong Kong.

“To be a welcoming international financial centre, you really need to embrace the dominant language and the two largest global economies. the US and China,” he said.

Rocky Tung, director and head of policy research with the Financial Services Development Council, said the industry must go beyond mere understanding of language.

“I believe that Hong Kong being an international hub is not only about finance, not about corporates being here, but also the people,” he said. “Therefore I think we should adopt an international [outlook], where we not only speak the language, but also understand the culture.”

That goes for mainland China as well, Leung said.

“Hong Kong people need to be in China and understand how to work there,” she said. The industry should embrace mainland counterparts to work together as one family on a range of issues, such as blockchain implementation.

“If we are presenting these opportunities that are big, and prosperous, the money will come,” she said, adding that doing business in Shenzhen and Shanghai is not just about speaking Mandarin, but about being immersed and knowing the culture.

Asked whether embracing the Middle East would mean turning away from the US permanently, Leung said that capital is boundaryless.

“Just because we may move to the Middle East from the US now because of geopolitics doesn’t mean Hong Kong is moving from the US for good,” she said. “[It’s] simply moving to where the investment opportunities are.”

Hong Kong should not pick sides, Chao agreed. “It’s a multipolar world,” he said.

Source : South China Morning Post