Hong Kong has done it again! It has knocked Switzerland off its perch for the top spot as the world’s largest cross-border wealth hub. But the irony is that Hong Kong has no borders while Switzerland has four with neighbouring countries: Germany, France, Italy and Austria..
The boost to Hong Kong’s international financial status came from an initial public offering (IPO) bonanza and capital inflows from China’s mainland, which shares a boundary with Hong Kong. Countries share borders with neighbouring countries but technically share boundaries with counties or provenances within the country. Hong Kong is a Special Administrative Region (SAR) of China with a high degree of autonomy. For example, both have different currencies, legal systems etc.
That very fine distinction was overlooked by Boston Consulting Group (BCG) when analysing cross-border wealth distribution. BCG is an American global management consulting firm founded in 1963. It is one of the "Big Three" (also known as "MBB", representing the first initials of world's three largest management consulting firms by revenue) along with McKinsey & Company and Bain & Company.
The BCG report revealed that Hong Kong's cross-border wealth management assets reached US$2.95 trillion — a 10.7 per cent year-on-year surge. That figure edged past Switzerland's US$2.94 trillion by about US$10 billion, making Hong Kong the world's largest cross-border wealth management center for the first time.
BCG projects that cross-border wealth managed in Hong Kong will grow at roughly 9 per cent annually between 2025 and 2030, compared to only about 6 per cent for Switzerland. Bloomberg goes further. By 2030, the gap in assets under management between the two centers is forecast to widen to about US$600 billion. Today's slim lead is not a finish line — it is the opening lap of a far larger structural shift, said Bloomberg, indicating that the financial future for Hong Kong appears robust.
Last year, Hong Kong reclaimed the global IPO crown for the first time since 2019, with 114 listings raising US$37.2 billion.
The city retained pole position as the world’s largest IPO market by proceeds in the first quarter of this year. A total of 37 companies raised about US$13.26 billion on the Hong Kong stock exchange’s (HKEX) main board in the three months to March 31, representing a 453 per cent increase from a year earlier.
About 500 listing candidates, most of which were mainland-based, are now waiting to raise funds in the city, up from 300 at the end of last year, according to HKEX.
The BCG report received wide international coverage including the Financial Times, Reuters, Associated Press and Canada’s National Post all noting that the surge in capital flow into Hong Kong helped topple Switzerland’s long-standing status as the traditional safe haven.
Across this international media coverage, one competitive advantage of Hong Kong was repeatedly emphasized — its connectivity function under "One Country, Two Systems." The Associated Press highlighted how Hong Kong's close ties with the mainland market have driven its wealth management business. Reuters likewise noted that Hong Kong "is cementing its role as China's gateway to global markets."
The current trade mission to Central Asia by a 60-member strong delegation from the mainland and Hong Kong led by Chief Executive John Lee is indicative of the aggressive nature the city is taking to maintain its ranking as the world’s top financial hub. Besides businessmen and women in the delegation drumming up partnerships between Central and East Asia, there is a bevy of financiers with deep pockets willing to invest in new proposals. Representatives of the Hong Kong Stock Exchange is also there promoting the bourse’s advantages for primary and secondary listings. This and future trade missions will surely broaden Hong Kong’s global client base while consolidating its role as China's gateway.
Mark Pinkstone
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When China’s Paramount Leader Deng Xiao Ping floated the idea of one country two systems for the future of Hong Kong, the west scoffed at the possibility of a communist regime and a capitalist bastion living hand in hand. Some 29 years later the prophets of doom were proven wrong as Hong Kong is now more prosperous than ever and it’s future will be more so.
For more than 150 years Hong Kong lived under a British colonial rule. There was no democracy, only authoritarian management. The succession of ruling governors were hand-picked by the Foreign and Commonwealth Office and appointed by the Prime Minister, without any consultation with the people of Hong Kong.
But the people of Hong Kong didn’t mind. If they had never seen democracy, how could they miss it. The governors were diplomats and their upper-crust training ensured that the natives were happy and that their rice bowls were filled. The diplomats got on well with the Chinese government as they knew that harmony was the key component to a successful relationship.
Then came along a politician for the first time to run Hong Kong in the name of Chris Patten, who had lost his seat in the Bath electorate, about 156 km west of London. John Major was Prime Minister at the time and a good friend of Patten. So, to make up for the political loss in Bath, Major offered Patten the cushy job of being governor of Hong Kong.
In 1992 Patten and his family arrived in Hong Kong and as a typical politician, he arrived like a bull in a china shop (pun intended). There was no diplomacy involved. Patten and Major had decided that the foreign office diplomats were pussy-footing with the Chinese during the previous decade negotiating Hong Kong’s future and a firmer stand was necessary.
Unlike his predecessors, Patten knew nothing of Chinese traditions and customs. He just could not understand Chinese mentality and that applied not only to the mainlanders but also the local Chinese. The East is East and the West is West and never the twain shall meet wrote poet Rudyard Kipling in 1889. But, in Hong Kong they did.
The Joint Declaration between Great Britain and China on the future of Hong Kong and the subsequent Basic Law (Hong Kong’s mini constitution) provided the pathway for Hong Kong’s future, including democratic elections for the city’s legislative council. But Patten was impatient and decided to introduce a fully elected legislature in 1995 immediately before the handover in 1997. This infuriated the Chinese-side, and they provided for a provisional legislature to replace Patten’s council as soon as Hong Kong was reverted to Beijing’s administration.
After 1997, Hong Kong formed its first directly elected Legislative Council in 1998, while the Chief Executive is elected by an Election Committee — a system similar to the U.S. presidential election. Hong Kong's Election Committee now has 1,500 members, whereas the U.S. Electoral College has only 538 members.
Since then, Hong Kong has flourished. The prophets of doom and Kipling were wrong. Despite many attempts by the west to dismantle the Deng formula Hong Kong is one of the most successful places on the planet. Year after year it is breaking records to the envy of many. Hong Kong has secured third place in the Global Financial Centres Index. In the latest World Competitiveness Ranking, Hong Kong's position has risen one spot further to rank second globally. And in the World Talent Ranking, Hong Kong has moved up 10 places to rank the fourth globally and the first in Asia. Hong Kong also continues to come first as the world's freest economy. And Hong Kong has what many want – stability.
The Hong Kong formula is unique and successful. Never tried before, it was seen as an experiment and the world was watching, waiting for it to fail. But the Hong Kong people are resourceful and will take any challenge head on. There is no failure.
The Hong Kong Special Administrative Region (HKSAR), established under the People’s Republic of China (PRC) Constitution, has maintained the previous capitalist system and way of life. Its common law system continues to operate, and it enjoys the free flow of people, capital, data, goods and more. The vibrancy and prosperity of the central government has always been Hong Kong's strongest backing.
Hong Kong’s 29th birthday under the PRC guidance, coincides with the 105th Anniversary of the Founding of the Communist Party of China. Naturally there have been celebrations all round, and justifiably so. Both Hong Kong and the central government are proud of what they have achieved. And both, particularly in the past year have taken top ranking as the preferred place in the world to trust and to do business.
Chief Executive John Lee, at a celebratory function on July 1 summed it up with: “Hong Kong, the Pearl of the Orient, will ride the wave of flourishing national development and sail with the wind, steering towards a brighter and more prosperous future!”
And the future is being mapped out in Hong Kong’s first five-year plan, currently under consultation with the public. The plan, a road map for future leaders to follow, will include a futuristic block of land, one third of Hong Kong’s total, to house high tech innovative research and development facilities with university, hospital and new town ancillary services. This Northern Metropolis straddles the river that acts as the boundary between Hong Kong and neighboring Shenzhen, with bridges linking the two; further proof that Hong Kong is an integral part of China.
