What makes Hong Kong a financial hub?
Yet it is important that investors not lose sight of Hong Kong's continuing importance as a
Hong Kong is both a key fundraising center for Chinese companies seeking access to international capital markets and the primary conduit for foreign firms to invest in China. While companies are increasingly choosing Singapore as their Asian base, Hong Kong's role as a financial center dwarfs that of its rival.
With over 163 licensed banks and 8 virtual banks Hong Kong has strong financial infrastructure. There is no control over capital movement and no capital gains and tax on dividends.
Being the most international city in the Greater Bay Area, Hong Kong has a business-friendly environment, good tradition of the rule of law, free economic system, and well-established information technology infrastructure and financial system, as well as a wealth of high-end talents and professional services with ...
Located at the heart of Asia, Hong Kong also thrives on close financial integration with Mainland China, extensive networks with the rest of the world, sound legal system, simple and competitive tax regime, free flow of capital, a full range of financial products, and a large pool of financial talents.
The top global financial cities are New York City, London, Singapore, Hong Kong, and San Francisco, as determined by the GFCI 34 rankings. Other important financial centers around the world include Shanghai, Frankfurt, Zurich, Tokyo, and Chicago.
Singapore and Hong Kong rank third and fourth behind New York and London but ahead of San Francisco as the global top five remains unchanged in the 35th edition of the semi-annual survey, compared with the previous edition in September. Singapore overtook Hong Kong to become Asia's top financial centre in 2022.
In the mid-19th century, Hong Kong became a major trading hub for the British Empire, attracting merchants from all over the world. The colony's position at the crossroads of the Pacific and Indian Oceans made it an ideal location for trade. Its deep-water harbour allowed easy access to the rest of Asia.
Avoiding Global Financial Crises
The first was the Asian Financial Crisis of 1997 and the second was the global liquidity crisis of 2008. Neither of these events caused problems in Hong Kong and the government did not need to take on extra debt to keep its economy afloat as other developed countries were forced to do.
Hong Kong maintains separate governing and economic systems from that of mainland China under the principle of one country, two systems. Originally a sparsely populated area of farming and fishing villages, the territory is now one of the world's most significant financial centres and commercial ports.
Why is Hong Kong popular for business?
Hong Kong offers businesses many advantages: Rule of law and level-playing field. Free trade and investment policy. Robust and efficient financial market.
Hong Kong has long been the region's leading financial hub. It offers a highly transparent and robust regulatory regime for financial services industries such as banking, securities and futures, insurance and retirement schemes.
Hong Kong is a hotbed for companies looking to leverage market advantages such as: An open, fair, and efficient business environment. Competitive tax regime. Excellent legal and dispute resolution services under the rule of law.
Singapore. With its strong links with London, Singapore has developed into the Asia region's largest centre for foreign exchange and commodity trading, as well as a growing wealth management hub.
Despite Britain handing it over to China in 1997, Hong Kong remains economically separate from China. In fact, Hong Kong is a special administrative region of China. This allows Hong Kong to enjoy a distinct economic and governing system under the principle of one country, two systems.
As at the end of October 2023, Hong Kong's stock market ranked the 4th largest in Asia and the 7th largest in the world, with the total market capitalisation reaching US$3.9 trillion.
| Rank | City | Country or Territory |
|---|---|---|
| 1 | London | United Kingdom |
| 2 | New York | United States |
| 3 | Singapore | Singapore |
| 4 | Hong Kong | Hong Kong |
Shanghai is referred to as a financial hub because it has the stock market, the banks, the asset-management firms — and because it's a place where people want to be and be seen.
In recent years, Dallas-Forth Worth has grown to become the second-largest hub for financial workers in the country. The moniker “Wall Street of the South” has been bandied about recently, although DFW actually surpassed the Los Angeles metro during the pandemic in December 2020 in that hierarchy.
Amid challenging macro-financial conditions, the financial system has remained stable, supported by strong institutional frameworks, in particular high-quality financial sector oversight and substantial capital and liquidity buffers.
How can Hong Kong maintain its prominence as a leading international financial hub and keep its attraction to foreign investors?
Hong Kong should strengthen its current position in the asset management and private banking sectors, and develop more depth in areas such as fixed income, FX, commodities, corporate treasury, REITs and risk management.
Hong Kong is one of the world's largest net creditors with net assets worth more than twice the size of its gross domestic output. Main contributing factors are the sharp increases in recent years in net portfolio investment and in other investments, including loans and currency and deposits.
Entrepreneurial Culture. There's a lot of competition, innovation, and entrepreneurial activity in Hong Kong. This means a lot of new (and often successful businesses) that billionaires often take an interest in, whether for acquisition or investment.
Hong Kong became a British colony through two wars: the First and Second Opium Wars. The First Opium War broke out in 1839. It is called the 'Opium War' because of one of its major causes: the British were smuggling opium from their Indian colonies into Chinese ports against the wishes of the Chinese government.
New York might be the richest city in the world, but more ultra-high-net-worth people (UHNW) prefer to call Hong Kong home. According to new findings by Wealth-X, Hong Kong came out on top of its 2023 World Ultra Wealth Report, which looked at the world's total population of UHNW individuals.
