‘Trapped’ in Hong Kong: zero-Covid misery casts shadow over financial hub’s future

Frustrated residents’ hopes that Hong Kong might learn to live with coronavirus were dashed this week as flights from eight countries were banned. 

With the new year comes a drastic re-tightening of the city’s notoriously strict Covid regime, after a small number of omicron cases broke through its defences.

Already feeling isolated, international residents and businesses are fast losing patience. 

“I’m sick to death of being trapped,” says one finance executive who has lived in Hong Kong for four years and has family in Britain.

Another, who moved from London around the same time, adds: “It’s such a shame the new rules have come in as we were starting to get hopeful for a better year. Suddenly we’ve taken a sharp u-turn. It makes me wonder when Hong Kong will ever be able to go back to normal.”

Hong Kong’s quarantine measures are already one of the strictest in the world, with incoming passengers subject to three weeks isolation in a government facility or hotel. The rules make it virtually impossible for senior executives to visit the business hub despite it being a core part of their strategy. 

Goldman Sachs’ boss David Solomon said late last year he did not expect to be able to visit Hong Kong or China for “quite some time”. 

“Being restricted in terms of leaving or coming back, the family pressure, that’s not a great dynamic for talent,” he said. 

As of Saturday, flights from countries including Britain and the US are no longer allowed, a 6pm curfew on dining-in has been imposed and bars and gyms closed.

“Two years into this pandemic, same response as if we just heard about Covid yesterday. What is the exit strategy, HK?” entrepreneur Jennifer Zhu Scott asked on Twitter shortly after restrictions were reimposed.

Despite calls from bank bosses for officials to soften their stance for the sake of the city’s future as an Asian financial powerhouse, extreme measures are still being used to stop any signs of infection.

It is an approach that has hit swathes of businesses: Hong Kong’s Disneyland was this week forced to close for the fourth time in line with Covid rules.

The latest controls raise fears there is no end in sight, and no plans to change tack. Morale is “as bad as you might expect”, according to one bank executive.

“Long-term residents are sad – that’s the best word to summarise sentiment,” adds a senior banker who used to live in the city. “Many are considering their future in Hong Kong.” 

The finance industry has already sounded numerous warnings. JP Morgan’s Jamie Dimon flew into Hong Kong on the bank’s private jet in late 2021 in an attempt to boost morale and thank staff for “sticking it out” after he was granted a rare exemption from the rules. 

The billionaire and Wall Street’s longest serving bank chief admitted it was becoming harder to hire and retain talent, echoing a letter from major financial lobby group The Asia Securities Industry and Financial Markets Association, which warned that almost half of its members were considering "moving staff or functions away from Hong Kong" due to the quarantine rules. 

In December, the British Chamber of Commerce published a member survey showing that 70pc of 152 respondents struggled to hire into the city for the same reason. It warned “there is a risk that Hong Kong will become increasingly isolated as an international business centre”. 

According to Benjamin Quinlan, chief of Hong Kong-based strategy consultancy Quinlan & Associates: “Many expat employees with families and relatives living offshore are finding the city’s policies quite restrictive and difficult to navigate – in short, it’s made travel somewhat unfeasible for many people.

“In terms of work, many banking employees are now very adept at working virtually. The real issue is around personal lives and families. Quite a few expats are considering leaving the city if the travel restrictions and strict quarantine requirements remain in force for much longer.”

A closed playground on Hong Kong Island. 'Restrictive' policies are putting pressure on bankers' families

Credit:
Paul Yeung/
Bloomberg

Bank chiefs have even begun digging into their own pockets to try and make the situation more bearable, with Morgan Stanley, Goldmans and JP Morgan offering Hong Kong-based staff $5,000 each for hotel quarantine for personal trips. 

Eddie Yue, head of the Hong Kong Monetary Authority, last month told a local newspaper his colleagues were sending finance executives trapped in hotel quarantine luxury food and wine packages so that they felt “less angry”.

But frustrations of long-term residents are not just down to Hong Kong and mainland China’s determination to eradicate the virus. Beijing’s security law, imposed on Hong Kong in 2020 to stamp out rising dissent, has pushed many to flee as their freedoms shrink. 

The city’s population dropped by 1.2pc in 2021, with British private schools last month forced to turn away Hong Kong applicants for the first time due to a record number of applications. Whitehall estimates about 300,000 Hong Kong citizens will move to the UK over the next five years under the BN(O) visa route. 

Yet concerns about life on the ground, particularly for locals, come as global financial institutions are racing to expand their footprint in China. Many executives in the city are convinced Hong Kong’s role as a financial hub – and gateway into China – will continue.

“There’s nowhere else in the region that would serve as a logical alternative as a financial services headquarters, except Singapore,” says Quinlan. 

“[Relocating] doesn’t make sense for many banks in Hong Kong as the vast majority of them have laid out major strategic growth aspirations in China, especially to capitalise on the opportunities presented by GBA.”

HSBC, Europe’s biggest bank, has already relocated some key executives from London to Hong Kong as its focus tilts more towards Asia. Careful not to upset Beijing, it has publicly supported the controversial security law as well as the unpopular quarantine measures.

Hong Kong is known for its extremely strict Covid-19 response

Credit:
TYRONE SIU/
Reuters

Rivals eyeing the same prize are treading with similar care, quietly shrugging off the latest restrictions. Others, meanwhile, are watching the city change quickly.

“With the combination of the dismantling of Hong Kong’s freedoms and autonomy, undermining of the rule of law, the death of press freedom, as well as Covid restrictions including the suspension of flights, Hong Kong is no longer the open, international city that it used to be, and as a result, over time business confidence is likely to be affected,” says Ben Rogers, co-founder of campaign group Hong Kong Watch.

“The influence of ‘Red Capital’ – investment tied to the Chinese Communist Party regime – may keep the city prosperous, but the loss of autonomy and transparency is likely to erode its status as an international hub.”

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