Compared with Singapore, Hong Kong seems to be winning the race for institutional capital management and hard assets investments.
Private equity funds, real estate funds and hedge funds prefer to be set up in Hong Kong and it’s fast becoming a magnet for talent that is specialised in Chinese financial services, equities, capital flow, asset management and regional banking.
Singapore vs Hong Kong
On the other hand, Singapore is taking the lead for private banking and wealth management. Hong Kong has a pool of private bankers who provide strong coverage of the China market, but their size and capabilities are somewhat limited when compared to Singapore, which offers family offices, a broad range of investment tools as well as a tax advantageous environment. In general, Singapore is becoming the regional center across a number of other industries for multinational companies. Singapore is where you can see hubs for international wealth management, consumer products, healthcare and South East Asian market specialists.
Against this backdrop, financial services companies are increasingly placing or grooming top executives with global responsibilities in Hong Kong, so they are at the front lines of pursuing their long-term corporate strategies.
Everyone’s heading east
Take for example, J.P. Morgan’s Jeff Urwin, head of global investment banking coverage, capital markets and mergers and acquisitions or UBS’ Alex Wilmot-Sitwell, chairman of its investment bank. Both moved to Hong Kong in the first half of 2012.
In addition, HSBC’s Robin Philips, global co-head of core investment banking, moved from London to Hong Kong last year. HSBC’S group CEO office is also based in Hong Kong, as well as GE’s President and CEO for Global Growth and Operations and KPMG International’s Chairman.
These moves are generally intended to demonstrate a commitment to the region, while enabling the corporation to get closer to suppliers, customers and new sources of capital and growth.
Indeed, Asia has evolved from being a sales satellite office for American or European companies. Today, global companies are investing in full-fledged corporate infrastructures here, including investment teams, operational centers, as well as regional risk and compliance teams. We see asset management companies moving key fund managers from Luxembourg or Boston to Hong Kong. Companies such as Fidelity and Black Rock already have full operation centres in China and Hong Kong.
Hong Kong’s draw
More and more, international companies are funding their business from Asia or buying Asian assets. As a key financial centre for Asia, Hong Kong is the place to be for companies looking for new sources of capital or investment opportunities. In particular, Hong Kong has been focusing on capital flow to and from China. The integration of Hong Kong’s financial sector to China’s is moving quickly.
We see demand for senior executives who can bridge capital markets to client coverage and investment opportunities to investors – either to bring Chinese investment opportunities and products to international investors, or to recommend international companies’ equities and international funds to Chinese clients.
Other areas with strong demand are product development, solution offering, research, office infrastructure like technology, legal and compliance and back office shared functions. Companies are also looking for Hong Kong-based professionals who can develop financial services offerings that address investor needs in a more tailored way, and who can distribute institutional and retail products.
Expect more relocations
Hong Kong’s role as a financial centre is evolving. Expect to see more global banking heads relocating to Hong Kong for better exposure to fast growing markets, easy access to China, lower tax rates and global standards in English-speaking services in a convenient international hub.
The good thing for local teams is that the decision-making process is faster since the big boss is based in the same time zone. There will be fewer 11pm global conference calls for Hong Kong-based bankers.
Alex Eymieu, partner, CTPartners and a member of the firm’s financial services practice.