Straight Talk presenter Eugene Chan (left) interviews Deputy Chairman of Financial Services Development Council Andrew Weir on TVB, Aug 29, 2023. (PROVIDED TO CHINA DAILY)
Deputy Chairman of Financial Services Development Council and KPMG regional senior partner Andrew Weir is on Straight Talk this week.
Weir says Hong Kong is developing a linkage with ASEAN and Middle East economies as the Guangdong-Hong Kong-Macao Greater Bay Area is opening up more opportunities. He also projects a more significant return of international investment and financial elites by mid-2024.
Check out the full transcript of TVB’s Straight Talk host Dr Eugene Chan’s interview with Andrew Weir.
Chan: Good evening and a warm welcome to Straight Talk. Our guest this evening is Andrew Weir, regional senior partner of KPMG Hong Kong. Weir is also the Vice Chairman of KPMG China, and has over 30 years of experience servicing listed companies, public bodies, investment funds, and multinational corporations, in Hong Kong, the mainland, Asia and internationally. He serves as the current deputy chairman of the Financial Services Development Council of Hong Kong, and is on several government trade committees. In recognition of his contribution to trade and investment links between Hong Kong, China and the United Kingdom, in 2017, he was made a member of the British Empire on the Queen's Birthday Honours List. Welcome, Andrew!
Weir: Great to be here, Eugene!
Chan: Right, Andrew, you are the regional senior partner of KPMG Hong Kong, a very renowned accounting firm. And we know that you're also on the global client advisory board. So, we think you're the best person to tell us, as the title of the show asks “when international investment and all the financial elites will return to Hong Kong?” Perhaps we can start by sharing your view on the current state of the international investment and financial activities in Hong Kong.
Weir: As I said, great to be here, Eugene. It's very timely to talk about this because it's a very fluid situation. Hong Kong is emerging from COVID. The international community outside Hong Kong, hasn’t had the opportunity to see Hong Kong for about three years. And certain views have got formed, I think about the situation in Hong Kong. And yes, there is uncertainty globally. And there's uncertainty outside Hong Kong about where Hong Kong is heading. But what we found, Eugene is the more we invite people to come, the more they see, the more they understand. Seeing is believing. And actually, whilst the sentiment may be a bit mixed, reality is much more positive.
Chan: Andrew, since you mentioned COVID, we know that we should come out after three years, it definitely has a significant impact on the whole world, not just Hong Kong, and how has the Hong Kong investment landscape evolved, for example, after the aftermath of the COVID?
Weir: I think you've got a combination of things. Definitely Hong Kong's connections with the Chinese mainland have strengthened. The perception of Hong Kong still, as the entry point for a lot of investment into the mainland is still very, very strong. But something which has been emerging as we come out of COVID is recognition that Hong Kong is also a very good regional hub. And this big push the government's making into ASEAN, linkage in the Middle East, for example, shows that actually, Hong Kong still remains actually a very good place. But the nature and complexion of the investment, where it's coming from, where it's going to, is slightly different than before.
Chan: Andrew, as you know, as read in the news, I mean the mainland market or the mainland economies are actually under some challenges. And then we have a lot of Hong Kong people actually leaving for the weekend, say to go to the GBA to find spend. So this is the reason why we see all the restaurants are not doing that well. And also the property market is starting to come down with the higher interest rate. And all that picture is a little bit gloomy at the moment. So, where are we heading?
Weir: I think we're going … globally, we're going through a great phase of uncertainty. There's massive change, post-COVID. You cannot throw as much capital and government funding at economies as has happened around the world without there being some form of consequence, Eugene, and the inflation repressures and also recession repressures as you emerge from COVID. When you've got disruption of the supply chain, for example, you've got the Russia-Ukraine situation, all of this has an impact. And I think the key word is uncertainty. I think that uncertainty will prevail for a short time still. And the key is how one looks at uncertainty and is sufficiently agile as an organization or as an investor to work out how we navigate through these uncertain times.
Chan: We had the secretary for labour, Chris Sun, here and the government actually acknowledged that we have had an outflow of talent from this city in the last couple of years. How is that affecting Hong Kong's capacity or capability as an international financial center from your point of view?
Weir: I think one has to be very clear. There has been an outflow. It's not a trickle but it's also not a flood, Eugene, there has been an outflow. And I noticed in my own organization, a certain type of professional person has been leaving. I think a number of these individuals are looking at coming back. I think it's quite notable a number of people who've gone to Singapore, during the last couple of years are starting to come back. I think the key is that actually, the word gets out there that Hong Kong is open for business, it welcomes international talent. It is an open society. It is an open economy. I think the more one can promote that, the better. And as I said earlier, inviting international business leaders, international investors to come and see, I think it's the best thing we all can do.
Chan: Right, Andrew. We had Allan Zeman here, also here a couple of weeks ago, and he said, he felt that Lan Kwai Fong has seen more people coming back. And there are some figures suggesting that trend is starting to reverse. What have you observed? Is there any specific trend that you have observed of these international elites returning to Hong Kong, as the world begins to kind of recover, any trend that can be seen?
Weir: I think there's a couple of very interesting trends you just mentioned … some change, actually, the linkages of Hong Kong to ASEAN, and Hong Kong to the Middle East, strengthened significantly. I think this is part geopolitical. It's part about the flow of capital. But I think there's a major change, possibly of historic proportions, where linkages between the middle east into Hong Kong, China, I think this is connected with a lot of uncertainty one seeing in the geopolitical world. But I go to the Middle East a lot, and Hong Kong, and mainland China are very much on the agenda. And if you look at the glide path of some of these very large sovereign wealth funds and investments in the Middle East, ASEAN, Hong Kong and China the proportion of investment here, and the notifications are increasing over time.
Chan: Since you mentioned the Middle East, I just remember, we also talked about the golf course. And then we're saying that we're hoping to get the Aramco Team Series and also the actual LIV events coming to Hong Kong, with the golf course not knowing what will happened to it for the time being, is that going to affect the confidence of the businesses from the Middle East to Hong Kong, being a free and welcoming city?
Weir: I don't think so. I think the Middle East, the Middle East entities are very interested in Hong Kong as a stepping off point for investing in mainland and are very, very interested in a long term strategic investment, joint ventures and other forms of investment in mainland. I don't think that golf situation will affect the Middle East. It may affect other investors, but I don't think about the Middle East.
Chan: Andrew, the government has acknowledged this issue. Its things are sort of reversing. Do you think all the initiatives that the government put in by the John Lee government, is it working or is there any suggestion that you will give him so that more talents will come to Hong Kong?
Weir: I think there's a lot of initiatives going in from the government. I mean, traditionally, Hong Kong has had a laissez-faire approach, you know “let the market decide, and then the government has enabled and facilitated”. But I think it's recognized, Eugene, worldwide now that governments have been much more interventionist and much more strategic, as all countries emerged from COVID. And I think the Hong Kong government's brought in a lot of good initiatives. I think in the financial services space, there's a lot of good ones, different connect schemes. And just the other day, the HKMA Hong Kong Monetary Authority was coming up with a new roadmap. And also there's developments on things like crypto exchanges, etc. So, I think there's a lot of good things. All I would say is the brand of Hong Kong and positive messaging of Hong Kong is something we all need to keep pushing time and time again. And to be frank, the private sector and organizations like my own, I've got a lot to do to help do that.
Chan: Right. Andrew. We know that Hong Kong has a well-established history as an international financial hub. And I'm sure you know, one of our strengths are the rule of law, I mean, free flow of capital, etc. But some people started to question Hong Kong is slowly becoming increasingly more like a mainland city. How would you respond to that statement? And does Hong Kong still have an edge?
Weir: It's a key question. And I get asked this a lot. The way I see it is yes, Hong Kong has become increasingly connected to the mainland, it has become, much more for want of another word, Chinese. And how that is projected is key. Hong Kong as an international finance center – the word international I think works two ways. One is the interest of the global community and participation in the global financial community, global financial world, but it's also how one articulates the fact Hong Kong's become more Chinese as being an asset to the international community, as well as an asset to China. I think that's very important. The other key point is the world of finance, Eugene. It is undergoing massive change, the innovation taking place in finance and the ecosystems which are developing are very different to what we grew up with.
Chan: Right, Andrew, thank you for putting a new perspective of what international means for Hong Kong. But these geopolitical tensions are ever increasing, as you read in the news, and you're a member of the International Business Council. And I'm sure you've seen the tensions mounting up, and how will you see Hong Kong’s … people’s confidence in Hong Kong stability, and also appeal as a financial hub, with all this geopolitical tension?
Weir: I think on a financial hub, the key is that all of these good things which are being put in by the government and regulators, making sure this is very clearly communicated. And that people can see a pathway or maybe a roadmap or a very clear sense of direction, so people can see, right, if we come to Hong Kong over the next three to five years, this is the way our sector within financial services or our sector, within the economy, how that is going to grow, how that is going to develop. So, I think part of it is about policy, which I think a lot of good things are happening. The second is about projection, communication, and really selling the right message about Hong Kong. I think that's something we all need to carry on working on.
Chan: Right, Andrew, let's take a break now. Viewers, do stay with us, we will be right back.
Deputy Chairman of Financial Services Development Council Andrew Weir attends the Straight Talk show on TVB, Aug 29, 2023. (PROVIDED TO CHINA DAILY)
Chan: Thank you for staying with us. And we have Andrew Weir, regional senior partner of KPMG Hong Kong, sharing his view on when international investment and financial elites will return to Hong Kong. So, Andrew, in the first half, you talked about Hong Kong’s economy, it is having some uncertainties, just like the rest of the world, and seeing is believing. And you think Hong Kong is sort of reversing the trend, people are coming back to see Hong Kong and we still have a very good niche as an international financial center. I think that is the main point you made. There is a recent executive order by President (Joe) Biden banning new US investment in sensitive high-tech technology in the mainland, Hong Kong and Macao, how will that impact us in Hong Kong and the GBA? Does it affect our IPOs?
Weir: It will affect IPOs to an extent. When I was chairman of the listing committee for US participation in China tech’s IPO was very, very significant. So, it will affect the composition of the investors in IPO, Eugene. I don’t think it will change the number of IPOs. There is so much alternative capital to the US capital. I think it will affect the sentiment, it sets a tone. But the broader international community and the broader international capital market is still investing in IPOs, and also in China.
Chan: What do you expect the Hong Kong economy to perform, say, the second part of 2023 and 2024? The reason I am asking is, I mean the government is trying to push Hong Kong, and with consumption vouchers, we are trying to encourage people to spend here, we are trying to reignite the night life in Hong Kong, as you read in the news, but how can we actually give it a real boost when the world, as we spoke about all these factors, as I mentioned earlier the geopolitical tensions, the slowing export of Hong Kong, that is something that the chief executive mentioned, and also the high interest rates.
Weir: I think the key is just reinforcing and doubling down on all the things which made Hong Kong competitive. And the first way to improve competitiveness is to take away any obvious areas of inefficiency or lack of competitiveness, particularly in the financial market, so that being the first step. The second one is we have to recognize Hong Kong’s economy relies heavily on forces beyond its control. Yes, some of these are geopolitical, but the major one is global economic flows and trends. So, ultimately much depends on the recovery, which I am sure will come, of the mainland market. And I think, I just looked at interest rate movements, I think we may have just a few more adjustments in the US. But beyond that I think we will be past that cycle. So, I think it is a question of probably toughing it out over the next 6 months, doubling down on the policies, which have always worked in Hong Kong, keeping the economy as open as possible, and as open for business as possible. And then I think the global economy will be back on track, maybe 6-12 months’ time.
Chan: So, you are relatively positive?
Weir: I am relatively positive. As I said, I think the sentiment is well understood, but the reality is better than the sentiment.
Chan: All right. Andrew, you being a British Hong Kong person who have lived here most probably longer than anywhere else in the world. You know how our city, there is a lot of sentiment, but reality is different, as you said, which is a very good point. But really the sentiment recently hasn’t been very positive, and there has been some very loud rhetoric, especially from the international media. So, you being a person who go outside Hong Kong and meet all our friends worldwide, how would you respond and tell them the true picture of Hong Kong?
Weir: It was really interesting. With the Financial Services Development Council, I had probably been involved in about 20 events promoting Hong Kong, projecting Hong Kong, and Eugene, you have to be very realistic when you do this, people just don’t want blind optimism, they want a measured approach, which actually, yes, there are some challenges, yes, there have been changes, but the outlook is still very positive. What I have found, though, is you get a much better audience when you invite people to Hong Kong, to come and share the Hong Kong story, and see the story. And without exception, all the major organizations we have hosted at KPMG or we have hosted through government, or FSDC, come to Hong Kong because they have been conditioned by 3 years of not seeing Hong Kong in international media. They come, they see, they meet the businesses, meet the regulators, maybe go into the Greater Bay Area. And they then get, I think, this renewed sense of purpose and a much more positive vibe about Hong Kong. That works much better than going overseas and trying to explain that Hong Kong is different from what they are reading in their local newspapers. So, ‘come and visit’ is a mantra I always use.
Chan: There’s a reason why Hong Kong has this ‘Hello Hong Kong’ campaign.
Weir: Indeed.
Andrew Weir (right) says Hong Kong is developing a linkage with ASEAN and Middle East economies as the Greater Bay Area is opening up more opportunities. (PROVIDED TO CHINA DAILY)
Chan: So, should do more of that?
Weir: I think so, definitely, seeing is believing.
Chan: Andrew, since its establishment, the national security department of the police side has been quite active. And there had been some cases involving former local political figures who have since left Hong Kong. And those who do not fully understand the picture and the background of this may believe in the papers that Hong Kong is becoming a police state, as some claimed, which is obviously not true because we live in Hong Kong, we know it is not true. How would you address such concerns, especially for those who live in a foreign country and have never visited Hong Kong before? I mean although you want to invite them to come, not everybody can get away and come. So, how do we deal with that?
Weir: I think the first thing, Eugene, is to recognize this as a key question, and not addressing it doesn’t work when speaking in international community. How does one address it? I think one says “look, the national security law is one aspect of the legal system in Hong Kong, for court system, for common law system, the overall rule of law which businesses operate on, is largely untouched”. And actually I’d say it is absolutely fundamental but it remains untouched. For the benefits of Hong Kong as an IFC and international hub, but that the national security law is a standalone, to an extent ringfenced element of it. And one just needs to run through it and explain the background of that to make sure people fully understand it. Another point very relevant is, I always talk about 2047, and that this isn’t a cliff edge where everything changes. And that when you look at President Xi’s speech when he came last year on the July 1, talking about the future of Hong Kong and touching on 2047, and that the system is working. I think these are very important points, so putting it in context is very important. However, it doesn’t help matters with some of the headlines one sees in the newspapers. When one tries to claim, it doesn’t help.
Chan: Andrew, you also being the chair of KPMG’s UK-China corridor. You have been leading work between Hong Kong and mainland and the UK. So, I am sure you see these challenges now because of all these geopolitics and the rhetoric that I just mentioned. So, do you see Hong Kong now trying to establish more links with the Middle East, as you just mentioned, and ASEAN? Would it overcome the challenge?
Weir: I think so. I think I go to the Middle East maybe 8 times a year. I have noticed massive changes over the last 4-5 years, starting even before COVID, Eugene, where the Middle East was starting to look much more East, to Hong Kong, Singapore, India, and of course China, as reference points. And as I mentioned earlier, the deployment of capital, the proportion coming in east is much greater than before. A fair question is “is this a long-term structural change or just a window or opportunity?” But whatever way one looks at it, my advice to everybody here is to take this as real and double down on relations with the Middle East, build up contacts, get reconnaissance, invite people from the Middle East here. And the same with ASEAN because I am convinced long-term the ASEAN and the Middle East trade patterns to Hong Kong and China will just get stronger and stronger. And the capital flows will go ahead of it.
Chan: Right. Andrew, you are also on the Greater Bay, Belt and Road, all these committees. You are on all these committees, so we have to ask you all these questions. People often talk about investing in the GBA, but in recent times, you see a lot of Hong Kong people are really listening, and they are spending over the GBA, compared to the mainland visitors who spend far less on average per capita in Hong Kong. Is that a concern?
Weir: I think on GBA, it is real. A few years ago, it was very much a sort of headline policy. It is real. All of our clients are very active in GBA, with KPMG are very active. It is real and I think there is a lot of policy enabled it, there is a lot of connect schemes, as you know. A couple of challenges on GBA: how can our young people engage even more? How can the young people of Hong Kong see the massive opportunity GBA brings? Interestingly, international investors see GBA as a new hinterland, the size of the UK economy, linking Hong Kong and a very big innovation technology element with Hong Kong as the finance center, so the international world, we go back to Middle East, are always talking about GBA. So, it is real. But as I said the challenge is how our young people can believe in it more? Do we all have a role? We have got schemes at KPMG and mobility, with people in and out of GBA. And the second one which I noticed, there’s an announcement very recently, it is about data and IT connections between Hong Kong and GBA cities.
Chan: Right. Andrew, as you know, the second Policy Address is now being prepared by our chief executive, John Lee. He is having a lot of consultations and listening to the comments. And I am sure all the government officials, including CE, will watch our show and what would you say to CE that, as the deputy chair of the FSDC, what steps do you think CE needs to take to kind of solidify Hong Kong’s position as a premium destination for international investors and financial elites in the coming year?
Weir: I think a lot of good things are going on. I think on the policy side, particularly financial services, tremendous things are happening. The advice I would give is clarity of pathway and roadmap for the next few years, so that the international organizations see where Hong Kong is going to be in the next 1, 3, 5 years, particularly in specific sectors, where some policy development market coming. Secondly, I think Chris over at the Labour Department has done great jobs on these schemes to attract talents. Again, I would encourage yet more of that, because it is not the dollar support which is key, it is the signaling for Hong Kong is open to international talents, and it is wanting international talents to come. So my advice would be, I think the policy stuff is largely there. How to get the message out, how to get all of us singing from the same song sheet with the “Hong Kong Inc”. message to attract international people in here, I think that is the key. So, it is as much the message and projection as the policy is itself.
Chan: Right. Andrew, last 10 seconds of the show, quick answer. When do you think we might see a more significant return of international investment and financial elites?
Weir: June 2024.
Chan: Thank you. Andrew, I am afraid that is all the time we have. And your message of seeing is believing for the international community is loud and clear. And I am sure your sharing would provide food for thought for our chief executive, John Lee, for his upcoming second Policy Address. Have a good evening and see you next week!
