Foreign companies and local professional groups have warned that Hong Kong’s financial hub status is being shaken by an intensifying brain drain problem as talent is moving out of the city due to prolonged quarantine and social distancing rules.
According to media reports, Citigroup Inc, an American multinational investment bank, is moving six senior equities staff members from Hong Kong to Singapore and other markets. Mandarin Oriental Hotel Group said it had allowed its key executives to temporarily move out of Hong Kong although the company was going to open more hotels on the mainland.
In the first 17 days of February, a net outflow of 36,936 people was reported in Hong Kong, compared with a net outflow of 15,252 in all of January, according to the Immigration Department. Professional groups said Hong Kong’s banking and accounting sectors were facing brain drain problems while they also faced difficulties in hiring information technology staff.
Pro-Beijing newspapers and politicians claimed western media had started a smear campaign against Hong Kong’s financial hub status. Hong Kong would continue to be a leading financial hub in Asia, officials said – noting that its stock and bond markets and banking and insurance sectors remained vibrant last year.
Meanwhile, the government announced on Friday that the chief executive election would be postponed from March 27 to May 8. The new nomination period will be April 3-16.
Since early 2021, Hong Kong had followed Beijing’s “dynamic zero infections” strategy and implemented strict quarantine and social-distancing rules to fight the pandemic. The city had not reported any local infections for months in the second half of last year until the global rise of the Omicron variant in late December.
On February 8, the Hong Kong government further tightened its social distancing rules and expanded the coverage of its “vaccine pass” scheme but it was criticized by Beijing for trying to shift towards the western countries’ “living with the coronavirus” strategy. On Wednesday, Chinese President Xi Jinping ordered the Hong Kong government to make epidemic control its top priority.
On Friday, Hong Kong reported 3,629 newly confirmed Covid cases and another 10 deaths. About 7,600 people tested positive preliminarily. The Center for Health Protection said some 4,800 specimens had yet to be processed.
As all hospitals are fully occupied, many patients are seen waiting outside accident and emergency departments in cold weather. The Hospital Authority said it had been emptying staff rooms, outpatient clinics and even corridors in various hospitals in an effort to make space for more patients.
The Hong Kong government said it was considering launching a citywide testing scheme next month. Medical experts said a large-scale lockdown was necessary.
Bloomberg reported on Wednesday that due to Hong Kong’s zero-Covid approach, about half a dozen senior equities staff at Citigroup were moving out of the city to Singapore and other places such as the United Kingdom and Australia. Citigroup’s Hong Kong-based spokesman James Griffiths declined to comment on specific personnel moves but said the bank was being as flexible as possible to support staff who wanted to relocate due to family reasons or for client coverage.
On the same day, Singapore, which shifted strategies slast summer to “live with the virus,” announced the launch of vaccinated travel lanes (VTLs) with Hong Kong and other regions. The city-state said vaccinated travel pass (VTP) applications for travel from Hong Kong, Qatar, Saudi Arabia and the United Arab Emirates would open on February 22. With the pass, vaccinated flight travelers can enter Singapore without quarantine and need only to undergo one rapid test within 24 hours after arrival.
Prior to this, Bank of America had started plans for relocating staff from Hong Kong to Singapore, the Financial Times reported on January 27, when only about 100 local infections were reported per day.
Mandarin Oriental’s chief executive James Riley said on February 10 that it was not feasible for his team to remain in Hong Kong. Riley said Hong Kong was now a “very poor” base from which to run a business. The company’s chief operating officer Christoph Mares, who left 15 months ago, had no plan to return to the city as he could not meet customers or go anywhere.
Besides, Pernod Ricard, a French spirit maker, was temporarily relocating its senior executives from Hong Kong to Dubai although the company renovated its Hong Kong office in 2020, the Financial Times reported on Tuesday.
On Friday, Ta Kung Pao, a pro-Beijing newspaper in Hong Kong, said the western media were trying to disrupt Hong Kong by smearing the city’s anti-epidemic policy.
Alice Mak, a lawmaker of the Hong Kong Federation of Trade Unions, was quoted as saying in the report that western countries were not qualified to comment on Hong Kong’s epidemic situation as they reported high infection numbers.
Chan Yung, vice-chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong, said Hong Kong would maintain its financial hub status only if it took strong measures to control the virus.
According to the Immigration Department, a total of 52,836 people have left Hong Kong during the first 17 days of this month but only 15,900 people have returned to the city.
Some Hong Kong-based Chinese workers also decided to temporarily return to the mainland as they lost patience waiting for quarantine-free travel between Hong Kong and Guangdong province, or so-called “border reopening,” which was supposed to kick off last December. They are required to be isolated at hotels on the mainland for two to three weeks.
Last year, at least 90,000 Hong Kong people migrated to the United Kingdom with their British national (overseas) visas while some others moved to Canada and Australia after the special administration region imposed the National Security Law on June 30, 2020. Many of these emigrants were medical staff, teachers and IT and financial professionals.
On January 22, Mary Huen, chairperson of the Hong Kong Association of Banks (HKAB) and chief executive of Standard Chartered, said many banks could not replenish their human resources as people could not enter Hong Kong without quarantine. Huen said the recent virus outbreaks had affected some banks’ staff relocation plans. She said HKAB would report the labor shortage problems to the government and regulators.
Loretta Fong, president of the Hong Kong Institute of Certified Public Accountants, said Monday that the accounting sector faced a serious brain drain problem due to Hong Kong’s emigration wave and strict quarantine rules. Fong said accounting firms had to retain talent with pay raises, bonuses and benefits as many employees had been attracted to work for listed companies, regulators and other private firms last year.
Currently, anyone traveling to Hong Kong is required to pay out of pocket to stay at a designated hotel for 14 days and undergo a pre-departure PCR test and six more after arrival. The traveler also must be quarantined at home for seven more days.
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