Tuesday, April 13, 2021

Hong Kong Court called Rich China Tits Its Grip


Hong Kong – Political opposition has been Rejected. Is speaking free Pressed. Independent court system maybe next.

But while Hong Kong’s top leaders draw a tighter line on a city of more than seven million people, they are thriving an important constituency: the wealthy. Top officials are preparing a new tax break and other sweeteners to portray Hong Kong as the dominant place in Asia to make money, despite the autocratic rule of the Chinese Communist Party.

So far the pitch is working. Cambridge Associates, a company investing $ 30 billion, said in March it planned to open an office in the city. Investment managers have set up over a hundred new companies in recent months. Wall Street Bank Goldman Sachs, Citigroup, Bank of America and Morgan Stanley are increasing their Hong Kong staff.

In an online collection of finance officials this year, Hong Kong’s financial secretary Paul Chan said, “Hong Kong ranks second after New York as the world’s billionaire city.”

Beijing cannot easily afford to intimidate Hong Kong’s bankers and financiers. The former British colony is a major gateway to the international financial system. Chinese companies need it to raise funds from global investors; Those companies and the rich Chinese also trust that they can more easily transfer their money abroad.

Beijing is therefore striking a careful balance. It is, like occasional violent protests, snatching freedom from the people of Hong Kong to prevent challenges to Communist Party rule Exploded two years ago. At the same time, it is trying to make the city’s financial class attractive to prevent it from moving to another business-friendly place like Singapore.

“It is a one-party state, but they are pragmatic and they do not want to hurt the business,” Fred Hu, a former chairman of Goldman’s Greater China business, quoted Chinese officials as saying.

For political financial types, the changes will have little effect, said Mr. Hu, who is also the founder of private equity firm Primera Capital Group. “If you are a banker or businessman, you may have political views, but you are not a political activist,” he said.

To entice the rich, Hong Kong is completing work on a large tax break that will primarily benefit private equity, hedge funds and other investors. Officials are moving to make it easier to connect the city’s wealth managers to the affluent mainland. Chinese companies are selling tens of billions of dollars of stock in Hong Kong, increasing the profitability of Wall Street banks.

In its most recent move, Hong Kong last week proposed limiting how much companies should disclose about their ownership, which could generate wealth in a city where Communist Party oligarchy families have long held Have invested my money on time.

Not everyone has been conquered. More than 1 percent of residents have left Beijing since the Comprehensive National Security Law came into force last summer. There are billions of dollars Swept out of local Hong Kong bank accounts And is in a jurisdiction such as Singapore.

Tension is running inside the magnificent office towers of Hong Kong. Even officials sympathetic to the government have refused to speak publicly for fear of being implicated in political shootings between Beijing and world capitals such as Washington and London. Hong Kong’s stricter rules on agitation in the epidemic may prompt some migrants to leave in the summer after school.

For now, however, financial firms are doubling down on Hong Kong. Neil Horwitz, an executive recruiter in Singapore, said the finances were likely to remain in Hong Kong “until the ship goes down.”

In its biggest offering to the investor class, Hong Kong has proposed to abolish taxes on investment income. carried interest, Which is typically earned by private equity investors and hedge funds. Officials discussed the plan for years but did not introduce the bill until February and it could pass in the coming months through the city’s Beijing-dominated legislature.

Have similar tax breaks Spark of criticism Is included in the United States. But Hong Kong feared a financial exodus without such benefits, said Maurice Tse, a finance professor at the University of Hong Kong’s business school.

“We have to pay tax benefits to keep these people around us,” he said.

Hong Kong has also proposed a program, Wealth Management Connect, which will give mainland residents in the southern region known as the Greater Bay Area the ability to invest in Hong Kong-based hedge funds and investment firms. Officials have claimed that it will provide access to 72 million people to foreign companies. Hong Kong and mainland Chinese officials Signed an agreement To launch a pilot program at an unspecified time in February.

Pandemic travel restrictions have slowed the proposal’s pace, said King AU, executive director of the Financial Services Development Council of Hong Kong, but it remains a top priority.

“I want to highlight how important China’s market is to global investors,” Mr. Au said.

Mainland money has already helped Hong Kong look more attractive. According to Data Suppliers, Dialogic, Chinese companies earned a massive $ 52 billion last year for companies selling new shares on the Hong Kong Stock Exchange. This year’s new proposals have raised $ 16 billion, including $ 5.4 billion. Kuiyashu, Which operates a Chinese video app. A record start has been helped by Chinese companies pressuring Washington Avoid raising money In the United States.

Managing those offerings helped Goldman and Morgan Stanley climb to the top of Asian industry rankings that collect fees banks. A Goldman spokesman said it planned to accelerate its recruitment in Hong Kong in 2021 compared to the previous year. A spokesman said Morgan Stanley has doubled its hiring pace this year.

Thomas Gotstein, chief executive of Swiss Bank’s Credit Suisse, said in mid-March that it would be Triple its fare Across China, and a spokesman said a Hong Kong staff increase was part of the same. Bank of America is adding more people to Hong Kong, while Citi says it will pay rent More than 1,700 people This year alone in Hong Kong.

British bank HSBC has faced pressure from Chinese state media Heave to the party line. In February, HSBC Chief Executive Officer Noel Quinn said “it is considering moving some of its top executives to Hong Kong, as it will be important to be” closer to growth opportunities.

In August, investment funds are also coming to Hong Kong, after authorities relaxed regulatory barriers to establish a legal framework used in low-tax, opaque jurisdictions such as the Cayman Islands and Bermuda. Government data shows that 154 funds have been registered since then.

City officials also proposed last week to allow companies to hide sensitive proprietary data, benefiting companies and Communist Party officials alike. This measure can be effective as of May, and does not need to be approved by lawmakers. Critics say the move will make it nearly impossible to track people behind registered companies in Hong Kong.

“Proposed legislation will facilitate corruption, fraud and other crimes,” David M. Said Webb, who is a former banker and long-time investor in Hong Kong.

It can also help those in China’s top leadership, who are vulnerable to any allegations that they have used their positions for personal gain. Family of Xi Jinping, China’s top leader, and Li JhanshuAccording to one mark, the Communist Party’s No. 3 officer, at one point the property of Hong Kong, which can be partially traced with public records.

While the authorities have welcomed the business, they have made it clear to the financial and business world that they will not do any dissatisfaction. In March, a Chinese vice president, Han Zheng, in a meeting with a political advisory group praised the stock market’s performance and the finance sector, but made clear its limits.

“The signal is very simple for the business community who attended the closed-door session,” said Michael Tien, a former Hong Kong MP and businessman. “Stay out of politics.”



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