FILE PHOTO: A general view of Two International Finance Centre (IFC), HSBC headquarters and Bank of China in Hong Kong, China July 13, 2021. REUTERS/Tyrone Siu
December 15, 2021
By Alun John
HONG KONG (Reuters) – Financial institutions think business conditions in Hong Kong and mainland China will deteriorate in the coming years, although they plan to keep investing in both markets, a survey by an industry association found.
The results suggest banks and asset managers are concerned about this year’s sweeping regulatory changes associated with President Xi Jinping’s “common prosperity” policy, though rules for financial institutions have largely remained unchanged.
The survey published Wednesday by the Asia Securities Industry and Financial Markets Association (Asifma), which represents large global financial firms, showed 46% of their members expected the regulatory and operating environment in Hong Kong would become more challenging in the next three years and 37% said the same about mainland China.
These were the only Asian markets where more respondents expected things to get worse than remain the same or improve.
Nonetheless, 84% said they were expanding their operations on the mainland, and 54% in Hong Kong.
In China, Asifma members “see a lot of positives when it comes to market development, but the fallout from ‘common prosperity’ is making life more challenging. Data is a good example, as is what is happening in the property market,” said Mark Austen, the group’s chief executive.
Authorities are strengthening rules governing how companies must handle customer data, including restrictions on transferring information overseas, a challenge for financial firms wanting to integrate their Chinese and global businesses.
“This goes beyond financial services, but they are collateral damage,” said Austen.
Asifma has also pointed to Hong Kong and China’s strict quarantine and visa restrictions under their zero-COVID policies as additional challenges..
Austen said financial firms in Hong Kong also feared legislation that would penalise financial institutions for enforcing foreign sanctions.
There was also uncertainty about how a National Security Law imposed on Hong Kong last year by Beijing would affect financial services.
(Reporting by Alun John; Editing by Stephen Coates)
Source: One America News Network
