Are Hong Kong’s days as a global business hub over?

Hong Kong’s Article 23, which expands on national security legislation imposed by China in 2020, comes at a time when the city’s administration is trying to reassure the world that it’s still a financial dynamo.

The Hong Kong General Chamber of Commerce argued it “will make Hong Kong a safer destination for local and foreign businesses and professionals operating” in the city, while Hong Kong’s chief executive John Lee had dismissed as “ridiculous” the notion that the administration only cared about national security, calling such concerns a form of “soft resistance”.

Hong Kong’s economy has been reeling from Beijing’s crackdown since the pro-democracy protests in 2019 and a harsh zero-Covid policy. Rentals for commercial and retail spaces have fallen, leaving office buildings and shopfronts vacant. There are fewer tourists – last year’s arrivals were only 60% of the pre-pandemic figure.

The value of the Hang Seng index – Hong Kong’s crown jewel – has fallen by more than 40% since 2019. India overtook the city in January to become the world’s fourth-largest stock market. Singapore has emerged as a stiff regional rival for finance. Global banks have been laying off people focused on Hong Kong and China, pointing to sluggish growth and plummeting investor confidence.

An exodus of capital and people has followed, with the former head of Morgan Stanley Asia declaring recently in a newspaper column that “Hong Kong is over”. Veteran investor Lam Yat-ming wrote in an economic magazine that investors should “cherish their lives and distance themselves from Hong Kong stocks”.

“Outside perception of Hong Kong” has changed, Mr Hack says.

“While the city is still distinctly different from the mainland, the focus on security may increasingly blur the distinction in people’s minds.”