There’s a sharp divide among expats in Asia between those who see Hong Kong flourishing after the UK vote to leave the European Union – a so-called Brexit – and others who suspect it could spell trouble for the territory.
While few felt immediate job losses would be a concern, there’s a great deal of uncertainty over the wider impact and little consensus.
A pedestrian walks past a bank display showing the Hang Seng Index closing figures following the results of the UK Brexit referendum (Credit: Getty Images)
Brexit has already made its mark on Hong Kong stocks – the day of the announcement, the Hang Seng Index at one stage dropped 5.8% before ending 2.9% lower.
One British expat who sees Brexit as a positive for Hong Kong is William Barkshire, managing director of Agora Partners, an independent strategy and capital markets consultancy business. He’s been in Hong Kong for seven years and plans to return to the UK in five. He doesn’t believe the vote to leave will have an immediate impact on jobs in his city – “it’s geographic and remote”.
But over the long-term, Barkshire said, the Brexit might reinforce Hong Kong’s attractiveness as an international listings centre for public companies, given that the exit from the EU could pose a risk to the proposed Shanghai-London stock market link (which is expected to go ahead in September). He was also concerned about the likely expansion of the Hong Kong-Shanghai Connect, an investment channel linking the cities. There are concerns that a number of public companies – including many Russian firms listed in London – may consider moving their listing to Hong Kong.
A 'Leave' supporter applauds during a live broadcast of the Brexit vote results in Hong Kong (Credit: Getty Images)
Matthew Maxwell, director of financial institutions credit at ANZ Bank, has made Hong Kong his home since 2010 and believes there could be payoffs for both London and Hong Kong.
The expat thinks Brexit could allow Britain to negotiate more trade with China. And some of that trade could go through Hong Kong, making good use of the city’s considerable financial and legal expertise.
But he doesn’t expect any of this to happen quickly as it will take time for any new trade arrangements to be negotiated.
The downside: exclusion?
Not everyone sees good times ahead for Hong Kong. Madeleine Price, head of HR business partner groups at banking and financial services firm BNY Mellon, sees the possibility of London moving to become more closely aligned with Shanghai at Hong Kong’s expense.
Shanghai is becoming more competitive and stronger…London could go directly to Shanghai
“Hong Kong has got to look at its positioning. Shanghai is becoming more competitive and stronger…London could go directly to Shanghai. The government in Singapore has strong views about its direction, but I’m not so sure Hong Kong is so sure of its direction.”
Some British expats living in this densely populated metropolis, where the tax is low and the local currency is pegged to the US greenback, can’t see large firms moving their headquarters out of London.
Barkshire agrees. “The Hong Kong legal system is the UK legal system, there’s a common language. I don’t see people shifting out of London,” said Barkshire.
South African Charles Searle, CEO of MIH Internet Listed Assets and a long-time Hong Kong resident, expects Hong Kong companies with bases in the UK to remain as long as the free trade arrangements stay in place.
The Hong Kong legal system is the UK legal system, there’s a common language. I don’t see people shifting out of London
“The UK has tremendous human resources advantages – legal and banking – and a strong rule of law tested over the centuries. There are huge similarities with Hong Kong which people are comfortable with so I don’t see changes unless there is a major disruption of trade,” said Searle.