Hong Kong reasserts role as safe haven in global finance amid Middle East turmoil The seven-week military conflict in the Middle East will redefine Hong Kong’s role as a global financial centre, positioning the city as a safe harbour for capital and investments. Anecdotal evidence suggested that more banks had turned to Hong Kong to protect their businesses and committed themselves to expanding their presence in the city. At the same time, inquiries about adding allocations of mainland Chinese assets among global investors had recently increased, potentially enlarging the customer base for the city’s asset-management industry and family offices and driving demand for offshore yuan-linked financial products. For years, Hong Kong’s status as a financial centre in the Asia-Pacific region has been challenged by Dubai, which has risen to prominence as a gateway linking Asia and Europe in capital flows, transport and logistics. With the war destabilising the Middle East – at one point forcing the closure of the Dubai International Airport and sending stocks in the Gulf region plunging – Hong Kong has re-emerged due to its geographical location, a pegged exchange rate, free capital flows and support from China’s economic strength. “In that context, China and Hong Kong are attracting renewed attention,” said Gary Dugan, CEO of The Global CIO Office in Dubai, which advises family offices and ultra-high-net-worth individuals globally. “There is growing interest among some clients in increasing exposure to China and Hong Kong. It is less a simple flight to safety and more a reassessment of where investors see relative value, policy consistency and long-term strategic opportunity.” Dubai now relies on trade, tourism and finance as the pillars of its economy, reflecting the success of its four-decade diversification away from oil for sustained growth. The United Arab Emirates city is home to Jebel Ali Free Zone, the biggest free-trade zone in the Middle East, and the second-largest stock market in the region, with combined market values of US$1.01 trillion. The city, also a global hub for gold trading, has a population of 4 million, about 80 per cent of which are foreign expatriates. Dubai’s economy grew by 4.7 per cent in the January-to-September period last year. While Dubai is not a direct target of Iran’s strikes against US Arab allies, the closure of its international airport in the earlier days of the war alongside the stranding of overseas tourists was enough to raise concerns about geographic safety among investors and put new investment projects in abeyance. Several Middle East-based banks had applied for business licences in Hong Kong to open offices, according to Alpha Lau Hai-suen, director general of InvestHK, an investment promotion agency under the city’s government, without revealing a specific figure. Global banks are also committed to boosting their footing in Hong Kong. JPMorgan Chase signed a 10-year lease with Sun Hung Kai Properties for 250,000 square feet of space in Artist Square Towers as its new Kowloon office. Despite the uncertainty arising from the war, the US bank would stick to its plan to boost its corporate banking team across Asia by 10 per cent this year as part of a long-term strategy of increasing the headcount by 40 per cent through 2030, according to James Roddy, head of global corporate banking. The resilience of Chinese assets throughout the war has added to Hong Kong’s appeal, boosting demand for yuan-linked financial products. The yuan has appreciated 0.7 per cent against the US dollar, making it the only Asian currency to strengthen since the US started bombing Iran. Government bond yields have fallen while stocks have held up. This is an encouraging sign for Hong Kong’s wealth- and asset-management industries, with HSBC’s Hong Kong unit saying some of its international clients had contacted local bankers for advice on diversifying their portfolios amid geopolitical tensions. Hong Kong is also capitalising on the geopolitical conflicts to complement its layers of financial services to global investors. The government was ramping up its drive to promote gold trading, a plan that would challenge Dubai’s global status in trading the precious metal, according to Brian Fung Wei-lung, CEO of the Hong Kong Gold Exchange. https://www.scmp.com/business/china-business/article/3350634/hong-kong-reasserts-role-safe-haven-global-finance-amid-middle-east-turmoil?pgtype=live (ICE HONG KONG)

Fonte notizia: South China Morning Post