Asia Trip Part One — Hong Kong
There’s a different feeling on the ground in Asia. There are many signs of visible growth (many construction cranes, for example), a fast pace, energy, and optimism. It's been three years since I was in China and Southeast Asia. I spent two weeks there in June and will write a three-part series about the cities I visited—Hong Kong, Shenzhen, and Singapore.
Hong Kong
I’ve visited Hong Kong for more than 20 years. With its beautiful, bustling harbor between Kowloon and Hong Kong Island, it's one of the world's premier cities. It's a city devoted to commerce, and every global brand is out in full force. There are more Starbucks since my last visit (true for every city I visited on this trip), and J. Crew has arrived recently with two stores. It's feeling more like a global world with every visit. While this has its benefits, the drawback is a slightly less pronounced local identity and culture.
There are several new skyscrapers including Hong Kong's tallest, the International Commerce Centre (ICC) on the western Kowloon side. ICC has a Ritz Carlton on the upper floors and claims to be one of the tallest hotels in the world. The city also continues to reclaim land from the harbor for development, which I hope is near an end. Overall the city looks terrific, and its blend of Eastern and Western cultures remains captivating.
In my world of investing, China continues to open up. It will soon roll out "mutual recognition" where mainland Chinese investors can buy Hong Kong mutual fund shares and vice versa. Previously Chinese investors could only buy shares of domestic Chinese funds, which in turn bought shares of mainland Chinese companies. Now, Chinese investors can buy Hong Kong fund shares that invest in global securities. Chinese investors will have access to a much broader range of investments and be able to build better, more diversified portfolios.
Investing directly in equities is also opening up in China. The Shanghai-Hong Kong Connect program will launch soon, which will pool the liquidity of the Shanghai and Hong Kong stock exchanges and allow each exchange to make a market in the shares of the other. So Chinese investors (starting with institutions and individuals with accounts in excess of 500,000 RMB, or about USD $70,000) can buy shares in Hong Kong companies.
Both of these developments are positives for Chinese investors. From an investment perspective, these changes should make shares on the Hong Kong stock exchange more attractive because of pent-up demand from China. Investors can participate in the growth of China and also get a boost from the coming exchange cooperation by buying Hong Kong shares (or funds/ETFs that invest in them).
As this happens, trading in RMB will rise and further pave the way for the eventual internationalization of the currency. There are already a growing number of bonds denominated in RMB, and trading centers for the currency are popping up. The RMB recently passed the Euro as the second most-used currency for global trade payments, according to SWIFT wire payments.
A final example of China opening up is the recent announcement by the Chinese government that it will allow foreign asset management firms to own more than 49% of a joint venture in China. This new rule will significantly boost the appeal of setting up a joint venture in the country. Foreign managers were beginning to exit China out of dissatisfaction with minority stakes, so this change should help stem that tide.
The increasing China-Hong Kong ties created a positive backdrop for the Morningstar Investment Conference Asia. We held the conference the week I was in Hong Kong, and it was the main reason for my trip. Leading fund managers spoke at the conference, and they were generally positive on Asian equities, despite some concerns over an overheated property market in China.
I always enjoy visiting Hong Kong. With its British heritage, it’s the most accessible city in Asia for Westerners. The restaurants and hotels set the global standard for service and quality. I love its rich history, commerce-centric style, and energy. A key takeaway from this trip was the “one country, two systems” framework that is the basis of the Hong Kong – China relationship continues to evolve. The different systems are slowly integrating as Hong Kong becomes more fully a part of China.
Photo: Luciano Mortula / Shutterstock
kastoor sell and services company in pakistan
10 年yes, i think it is positive to the furtur.
ENGo AGR?NOMO
10 年No doubt it is the country's fastest growing
Lowndes Consulting Services
10 年One of the imponderable questions, sitting in Hong Kong, is whether in the longer-term Hong Kong can maintain its position as the gateway to China, particularly in finance. We have seen that although China initially preferred Hong Kong as the offshore RMB centre it soon realised the benefits of Singapore, London and Paris as offshore RMB centres and so Hong Kong soon lost its privileged position. Maybe that will be true of China capital markets businesses generally or maybe Shanghai will use its new FTZ status to challenge Hong Kong further. The good news, though, is that London built its position and scale as a financial centre to a great extent on being the US banks' destination of choice for doing business in Europe in the 80's and 90's. So hopefully Hong Kong can remain in the same position for China too. As said ... probably imponderable as a question.
Hospitality Professional
10 年I lived 2 years in Singapore and 9 years in Beijing visited Hong Kong 3 times over the years. Hong Kong for me is the place where Dim Sum & High tea, Chungking Mansions & 5 star hotels with impeccable service, Chinese traditions and values & colonial heritage coexist side by side. That is for me very much uniquely and distinctively Hong Kong.