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Two Currencies One Nation with Invest Hong Kong

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Amidst the many foreign trade delegations in attendance at this years’ Money2020, Hong Kong stood out. The inward investment that the Special Administrative Region receives and the IPOs listing on its exchange make it a clear leader in global investment.

One of the reasons why Invest Hong Kong ensured that they were visible at Europe’s leading fintech event, Money2020, is because of success stories like AirWallex:

And AirWallex isn’t the only success story from Hong Kong’s fintech scene. Crypto.com, also at Money2020, is another leading fintech who are making a lot of noise across Europe. We met them at Fintech Week London too, and will be joining them at this year’s Singapore Fintech Festival. Then there is STATRYS. #DisruptionBanking spoke with Bertrand Theaud, founder of STATRYS in late 2020 who shared how:

“Hong Kong acts as a great collection point of these small family businesses in Asia, where banking and access to financial resources are difficult to acquire whether it be because these companies have such few associates or even just unstructured finances preventing them providing the right documents to open business accounts easily.”

STATRYS was only officially launched in January 2020, today they are already making huge waves in the market and have secured further investment to grow their fintech.

Another landmark fintech brand to come out of the Special Administrative Region is Hong Kong Fintech Week, an event that many of us are familiar with. This year’s event kicks off on the 1st of November. And if you want to know if it’s worth getting involved, then you may want to know that last year’s event attracted over 1.2 million viewers, many of them from mainland China. Something that not only events in Hong Kong benefit from, but fintechs too.

Hong Kong, Asian Tiger

We met with Andrew Davis, Head of Investment Promotion at Invest Hong Kong whilst at last month’s Money2020 in Amsterdam.

We started by asking Andrew whether Hong Kong continues to maintain its prestigious role as an Asian Tiger. Or, as they are also known, Asian Dragon.

“The fundamentals of Hong Kong remain incredibly strong. COVID has made everything harder, because most people cannot travel. They can’t travel between Europe and Hong Kong as easily, or to China. That is the big issue we’re facing as far as remaining an Asian tiger.” Andrew explained. “Whether you’re looking at the homegrown unicorns, like Airwallex, who are here at Money2020, or other businesses that are looking to set up in Hong Kong, like fintechs from around the world.

“The opportunity is what people are interested in. And, fintechs go where banks go. And we have 80 of the world’s top 100 banks in Hong Kong. They’re not going anywhere.”

Just recently HSBC, like many other banks, ‘Bet Big on China’. Last year, HSBC generated $10.8 billion in pretax profit from its operations in China and Hong Kong. Noell Quinn, HSBC’s CEO, stated to British MPs in January this year how: “If the question was whether I am willing to walk away from Hong Kong, the answer is no. We are too committed as an institution.”  

Hong Kong – Gateway to China

HSBC are not alone, Citi opened a China desk in Singapore last month. Asset-management divisions of JPMorgan Chase & Co., HSBC Holdings PLC, Singapore’s DBS Group Holdings Ltd. And Bank of East Asia Ltd were all quick to welcome the launch of ‘Wealth Management Connect,’ according to the Wall Street Journal. The arrangement lets mainlanders in nine cities in the southern province of Guangdong buy investment products in neighbouring Hong Kong and Macau, while individual investors in those two cities will be able to buy onshore products. It all forms part of President Xi Jinping’s ‘Greater Bay Area’ initiative.

We asked Andrew if he also saw companies use Hong Kong as a ‘gateway’ to China. Andrew agreed: “It’s in a variety of sectors, like WealthTech for example. I just spoke to one of my clients from the UK and they are going to be doing a whole load of cross-border stuff. They’ve grown in 3 years to 50 staff in Hong Kong. A lot of that growth is driven by the wealth market, cross-border opportunities, the Greater Bay Area initiative and things like that.”

An Asian Tiger is characterized by having an educated populace, high savings rates and resilient economy. Outside of the Tigers, there is Malaysia, Thailand, the Philippines, and Indonesia who are sometimes referred to as the ‘Tiger Cub Economies’. The Tiger Cubs also have a highly sought after work-force, especially in the digital and financial sectors.

But Hong Kong doesn’t just have to rely on talent from the Tiger Cubs to help augment its workforce, there is a much larger catchment area through the geographic proximity of cities like Shenzhen.

Hong Kong and Talent

With growing pressure facing firms across the world in the hunt for talent, we spoke to Andrew about how this conundrum has been faced by businesses in Hong Kong. He agreed that Hong Kong, like many places, has a large tech community, but demand is still on the rise. “The Hong Kong government is making fundamental efforts to attract more talent, to bring in the best and the brightest. The travel restrictions are still the biggest impediment here, but hopefully things will improve.”

Fortunately talent doesn’t all have to be located in Hong Kong in order to succeed, Andrew continued by explaining how “places like Shenzhen can help companies augment the tech teams in Hong Kong. Or just across the border, there is Vietnam, Malaysia, Philippines. It really all depends on what elements of back office support a company needs. Different countries in Asia offer different levels of support and different price points.”

Today, there are 11 professions in the Talent List Hong Kong, some of which include Asset Management and Fintech Professionals, Actuaries, Data Scientists & Cyber Security Specialists.

Still not convinced? This video might provide further insights:

Hong Kong Fintech City

Many fintech entrepreneurs as well as banking innovators will be familiar with concepts such as ‘Sandbox’. Hong Kong’s Fintech landscape is rich, and Andrew assures us that it is just as developed as the UK.

“It’s essential that companies are aware of what is happening in Hong Kong. And that’s where Invest Hong Kong comes in. We are the people who are facilitating the soft landing of businesses from around the world. The recent Fast Track programme, which aims to help businesses as they come in, by introducing them to the regulators, or to the banks in Hong Kong.

“We’ve had a really strong take up from UK businesses. It’s the opening of doors, facilitation, helping them to understand, whether it’s the digital environment or whether its’ which licenses they need,” Andrew explained.

One of the strengths of Hong Kong’s financial pedigree is the Stock Exchange. Although Ant Group’s IPO may not have gone through in late 2020, Andrew assures us that there is a huge amount of liquidity in Hong Kong:

“There’s a very strong regulatory framework, one that is attracting businesses from around the world to do listings or secondary listings on the Hong Kong Stock Exchange,” Andrew shares.

As to why companies prefer listing in Hong Kong, then say Shenzhen or Shanghai, Andrew elaborated, again pointing to liquidity. “It’s access to liquidity. Whether its institutional investors, stockbrokers, or other players in capital markets. There is a hugely developed market in Hong Kong.”

One Country. Two Currencies

While many of us have been looking at Hong Kong and China’s relationship as ‘One country, two systems’, many commentators have overlooked the benefit of two currencies.

Andrew explained how a colleague of his recently told him that:

“China is the only country in the world with two currencies. It has the Yuan and the Hong Kong Dollar.”

While the Yuan’s future is guaranteed, Andrew is also convinced that the Hong Kong Dollar will remain a currency too. “It’s really because until the Yuan is fully convertible and internationally traded, the Hong Kong Dollar provides that ‘sandbox’ where you can try things out. For example with initiatives like Stock Connect and Wealth Management Connect integrating Hong Kong with China. That’s a perfect example of where Hong Kong brings a huge amount of value to businesses who want to explore financial technology and commercial opportunities in Asia.”

To find out more about what Invest Hong Kong can do for your fintech, you may want to do more than just check their website. With Hong Kong Fintech Week only a month away, it would be more than useful to see what the event holds for attendees too.

The opportunities for companies in Hong Kong look more than promising, we have only touched on some of the initiatives and benefits in place in today’s story. But who knows what tomorrow will bring?

Author: Andy Samu

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