Roach bites his tongue over Hong Kong’s placing in global survey

Mark Pinkstone/Former Chief Information Officer of HK government

Former chairman of Morgan Stanley Asia, Stephen Roach and his merry men of doomsayers must be choking over their breakfast when reading the morning news that Hong Kong had secured third placing in the Global Financial Centres Index (GFCI) and close on the heels of top notchers, New York and London.

Hong Kong was also top dog in the Asia-Pacific region, regaining its position by tipping Singapore by two points.

Earlier in the year Roach wrote in the China-bashing Financial Times that “Hong Kong is now over” and that the “wheels came off” during the 2019-20 “massive pro-democracy demonstrations,” which were, in reality, full blown riots causing death, serious injuries and loss of property through arson attacks.

And he repeated his forecast later during a talk at the Foreign Correspondents’ Club in Hong Kong after receiving severe criticism for his earlier comments. He was highly indignant about the criticism, and the talk was to solidify his views. But he was wrong. Again.

Roach and others live in a world of numbers without the “HR.2” factors – human resources and resilience. They look at the trajectory of the stock market and other financial indicators only, without considering the Hong Kong “HR.2” factors.

The Hong Kong government noted that the scores in the index were rated among the top in various areas of competitiveness, including 'business environment', 'human capital', 'infrastructure', and 'reputational and general'. Hong Kong's rankings in various financial industry sectors also rose significantly, including 'investment management', 'insurance', 'banking' and 'professional services'. Among them, the ranking in 'investment management' advanced to first globally. In addition, the report assessed the financial centres' fintech offerings, and Hong Kong's ranking rose five places to ninth, making it among the top 10 fintech hubs.

That is, indeed, quite an achievement. Yes, Hong Kong has had its fair share of troubles which were seized upon by the US-led doomsayers. We had the 2019-20 bloody riots, fuelled by the US State Department’s National Endowment for Democracy (NED), followed by COVID-19 and a sluggish financial clawback. Hong Kong may be down, but not out.

Today, in a remarkable comeback, Hong Kong's asset and wealth management business is booming, with assets under management growing by about two per cent from the previous year to more than HK$31 trillion (US$4 trillion) by end-2023. Net fund inflows reached HK$390 billion (US$50 billion), representing a year-on-year increase of over 3.4 times. The development of the family office business in Hong Kong continues to gain momentum. The New Capital Investment Entrant Scheme has continued to receive overwhelming response since its launch in March, with more than 550 applications received so far. It is expected to bring in more than HK$16.5 billion (US$2.11 billion) in investments to Hong Kong.

The Global Financial Centres Index (GFCI) ranks the competitiveness of financial centres based on over 29,000 assessments from an online questionnaire and over 100 indices from organisations such as the World Bank, the Organisation for Economic Co-operation and Development (OECD), and the Economist Intelligence Unit. The first index was published in March 2007. It has been jointly published twice per year by the London-based think tank Z/Yen and the China Development Institute since 2015. It is widely quoted as a top source for ranking financial centres.

In its latest bi-annual report, GFCI listed New York first with 763 points, London 750 and only one point behind is Hong Kong third at 749 points, Singapore fourth, Shanghai eighth, and Shenzhen ninth. London is now the only European centre in the top 10 after Shenzhen replaced Seoul and Frankfurt in the top 10. Of the top 10 places, Asia has four, equalling the US.

In the various sub-rankings, Singapore beat Hong Kong by one point in the FinTech industry. However, this could change in the forthcoming years as Hong Kong develops the Northern Metropolis as a major technology hub with synergies linking similar activities across the boundary river with Shenzhen. FinTech (financial technology) is a catch-all term referring to software, mobile applications and other technologies created to improve and automate traditional forms of finance for businesses and consumers alike. Good examples are PayPal, which is way ahead of the game, and Uber money, a fintech app that includes Uber wallet, debit and credit cards etc..

The Hong Kong SAR government noted that the report “clearly affirms Hong Kong’s status and strengths as a leading global financial centre… As an international financial centre, Hong Kong brings together the world's top financial institutions and talent, provides professional financial services, and owns a deep and broad capital market. Our regulatory system aligns with those of major overseas markets, with the free flow of information and capital. Under 'one country, two systems', Hong Kong's unique position of having the strong support of the motherland while being closely connected to the world, empowers us to fully leverage our role as a 'super connector' and 'super value-adder'.

For the doubters of Hong Kong, it is not easy to kill Hong Kong with a few well-worn cliches and sound bites. Hong Kong has proven time and again that we are here to stay.

Mark Pinkstone

** 博客文章文責自負,不代表本公司立場 **

Mark Pinkstone/Former Chief Information Officer of HK government

The never-ending debate about saving the environment and development has now turned to the upper most regions of the New Territories. Consultation on the San Tin Technopole is seeing debate on both sides, but a solution may be on the horizon.

The San Tin Technopole is part of a much grander development, known as the Northern Metropolis, announced by then Chief Executive Carrie Lam in her annual policy speech in 2021. As a visionary plan for the future development of Hong Kong it stretches along the entire Shenzhen River (Shum Chun River) boundary with Shenzhen, covering an area of about 300 square kilometres, or about one third of the total land area of Hong Kong. It will eventually have a population of about 2.5 million people, providing about 650,000 jobs. About 150,00 jobs will be in the innovation and technology sector.

The Technopole will be the centrepiece of the overall development, but it comes with a price. Large expanses of wetlands, home to many species of migrating birds, will be sacrificed to make way for new development. Naturally, conservationists and green groups are opposed to the plan and at last count some 80 per cent of submissions to the Town Planning Board were against the proposals. And the de facto authority for the New Territories, the Heung Yee Kuk, insists that the villages should also be integrated in the overall, which, at present, they are not.

Hong Kong is currently experiencing a golden era for innovation and technology (I&T) development, which is quickly emerging as the new driving force for future economic growth. Major science parks are already well established the Cyberport in Pokfulam and at the Science Park in Sha Tin. The San Tin Technopole, by integrating the Lok Ma Chau Loop with land in the San Tin area, will further promote I&T cooperation between Hong Kong and Shenzhen, alongside the Shenzhen Innovation and Technology Zone on the other side of the river.

The Hong Kong-Shenzhen Innovation and Technology Park (HSITP), which is located in the San Tin Technopole, covers 87 hectares of land. With funding approval in early 2021, HSITP’s first phase of development involves eight buildings and will provide an estimated gross floor area of about 116 550 square metres, including research and development (R&D) buildings with laboratories and offices, InnoCell and facilities for setting up an InnoLife Healthtech Hub to focus on R&D in life and health disciplines. InnoCell already located in Hong Kong Science is a pilot project of using Modular Integrated Construction (MiC) in Hong Kong. It provides a minimum of 500-bed spaces with supporting ancillary facilities including recreational and shared living/working space integrated with the residential units], This first phase is expected to be completed in phases from end-2024 onwards.

Already new roads spinning off the northern highway are being built and a forest of cranes dot the horizon at Kwu Tung North.

The rugged terrain of Hong Kong has created land shortages which led Carrie Lam to unveil two new areas for development – the Lantau Tomorrow Vision and the Northern Metropolis in her policy address. The latter, which has priority over the Lantau plan, is expected to provide some 350,000 housing units.

As for the fish ponds, Hong Kong once had a thriving aquaculture industry with much of the New Territories being a multi-patched quilt of fishponds. Today, this has diminished dramatically to become a “sunset” industry with pond fish farmers producing only four to five per cent of fish eaten locally. Many of the ponds remain empty or drained and serve no purpose to the economy or the environment. This was further confirmed by Charman of the Hong Kong Environment Protection Association, Fan Xitai questions in the local press if the ecological value of the area is viable. He believes that more than 60 per cent of the ponds are abandoned or idle and many are filled with chemical and construction waste.

Development, on the other hand brings great economic benefits, but its high-rise buildings and infrastructure facilities will scare off migrating birds and constrain their natural habitat.
However, a coalition of the Hong Kong Institute of Landscape Architects (HKILA) and the Hong Kong Wild Life Fund for Nature (WWF) have teamed up to present a balance in the debate. The HKILA also established a platform between Shenzhen and Hong Kong experts to formulate the guiding principals for ecological and landscape planning in the area.

It proposes creating a multifunctional green space to provide recreational, flood attenuation and wastewater treatment functions while enhancing the habitat connectivity of Deep Bay; create the first ecological corridor for otters in China; and among other things, adjust the building height restrictions in the Mai Po Lung Egretry and Lok Ma Chau to avoid the impact brought by high rise buildings in the flight corridors of migrating birds.

The technology buildings will be located in the centre of the protected areas.

How this will be received by the Town Planning Board is still uncertain. At least it is a plan to be carefully considered to bring peace of mind to both the developers and conservationists. But, more importantly, development of the Northern Metropolis will strengthen Hong Kong’s position in the Greater Bay Area expansion plans.