Published: 20:31, June 12, 2024 | Updated: 10:00, June 13, 2024
Resilient Hong Kong repeatedly bounces back
By Mark Pinkstone

Former Morgan Stanley Asia chairman Stephen Roach is seen by many as an intelligent man. However, he still lives in the past and cannot understand why many people are critical of his forecast that Hong Kong is dead or dying.

He ran the world-renowned finance house in Hong Kong for five years during its boom years before his retirement in 2012. The Hang Seng Index was hovering around the 20,000 mark, while the total capitalization of Hong Kong’s securities market at the time was HK$21,950 billion ($2,810.8 billion), 25 percent higher than the previous year. There were 1,547 companies listed on the Main Board and Growth Enterprise Market. Of these, 721 were Chinese mainland enterprises, constituting 57 percent by market capitalization and 70 percent by annual turnover value. It was boom time.

But since then, dark clouds loomed over Hong Kong. First, the riots of 2019-20, followed by the COVID-19 pandemic, which shook the world. Hong Kong suffered severely, and the road to recovery has been slow but steady. However, the Hong Kong stock market, with the Hang Seng Index now hovering around the 18,000 mark, has seen some positive trends. Recently, the market benchmark index rose to around 19,700 points, its highest level in three months, erasing all losses for the year. Investors are optimistic, and there’s speculation that the current low valuations could encourage more company management to buy back their shares.

Earlier, Roach had written that “Hong Kong was over”. When the special administration region authorities and others refuted his claims, he told the Foreign Correspondents’ Club (FCC) that their comments were a “worrisome sense of denial”. In other words, he’s upset that nobody listened to him.

Obviously, he learned nothing during his five years in Hong Kong. The resilience of Hong Kong people is renowned. Fifty years ago, Hong Kong was the toymaker of the world, and when that bottomed out, the manufacturers switched their factories to producing textiles, clothing and apparel for international labels. That eventually moved to neighboring Shenzhen, where the factories were reconfigured to make electrical items and computers. International money came pouring into Hong Kong, so another change came about, and the city quickly earned the reputation of being a financial hub servicing the world. Yes, Hong Kong people can adapt to change quickly, which Roach fails to recognize. He believes that the people of Hong Kong cannot change by themselves and need Beijing’s prodding and support, which, he said, is not in a position to give. How wrong he is. Change is the name of the game for the people of Hong Kong, as the past 50 years have shown.

Roach is an American and predictably toes the American line that everything about China, and the HKSAR by extension, is terrible, and any plans are doomed to failure

While Roach slammed Hong Kong at the FCC, the city’s trading neighbors took a more positive perspective on the HKSAR’s future.

The United Overseas Bank (UOB) in Singapore has found that overall business sentiment in Hong Kong remains positive, with approximately two-thirds of enterprises expecting improved performance in 2024 despite economic uncertainties. The study found that about 80 percent of the 550 firms polled are increasingly exploring expansion plans, mainly to the mainland, Taiwan and Southeast Asia, during the next three years to enhance profitability and build an international reputation.

“The findings of the study underscore the remarkable resilience displayed by Hong Kong businesses in capturing new growth opportunities despite challenges,” said Ricky Ng, head of wholesale banking at UOB Hong Kong.

However, the path to international expansion is not without obstacles. Around 40 percent of businesses have encountered regulatory hurdles, compliance challenges, a talent shortage, and difficulties securing partnerships.

But a talent shortage is not a problem for the city, said Deel, a global digital human resources platform. Hong Kong’s large enterprises remain optimistic about its ability to attract and hire talent, highlighting its attractiveness as an international hub.

Deel’s 2024 Hong Kong Enterprise Business Leader Pulse Check, conducted in April, gathered responses from 250 business decision-makers across various sectors in Hong Kong, representing large enterprises each with 1,000 employees or more.

Some 83 percent of the respondents struck an upbeat note regarding the city’s talent landscape, citing Hong Kong’s global reputation, the feasibility of accessing a global talent pool through technology, and its unique opportunities as critical factors that make it an appealing destination for top talent from around the world.

The Deel report also said that the HKSAR government’s talent policies have instilled confidence among the city’s human resources practitioners, with 86 percent expressing a positive outlook.

Roach says he uses raw data to draw his conclusions about the future of Hong Kong and China as a whole. But more than raw data is needed. Other analysts broaden their scope to include the most crucial aspect of their forecasts — the human factor.

Roach is an American and predictably toes the American line that everything about China, and the HKSAR by extension, is terrible, and any plans are doomed to failure. But regardless of what Roach says, the future will reveal the truth. And I hope he is ready for some pleasant surprises.

The author is a former chief information officer of the Hong Kong government, a PR and media consultant, and a veteran journalist.

The views do not necessarily reflect those of China Daily.