By Tom Fowdy
Hong Kong's Hang Seng Index is booming.
Having swiftly recuperated all its losses caused by Trump's trade war announcement in April, it has now surged to 23,000 points (having started the year around 19,000), up over 20% and climbing out of the rut that the challenges besetting the city also imposed on it from 2019 to 2023. However, in addition to that, according to CNBC:
"New listing volumes on the Hong Kong Stock Exchange [have] jumped around eight times to $14 billion in the first half of this year, from just $1.8 billion in the same period in 2024," leading the broadcaster to conclude: "Investors and businesses' enthusiasm for Hong Kong's equity capital markets is roaring back." According to the media, the massive surge of inbound capital into the city is being driven by mainland Chinese firms seeking to establish new funds, which has as CNBC notes: "That puts the city on track to become the world's largest listing destination this year" which is even "surpassing Nasdaq and the New York Stock Exchange."
Make no mistake about it, against all odds, Hong Kong is once again the world's leading financial centre. Headlines from various media organisations, even going as far as proclaiming the "death" of Hong Kong and its imminent demise, have aged like milk in the sun, proving that the city continues to be a critical gateway between China and the world, and thus occupying an extraordinary role in its pathway towards national development.
Why is this happening? First, the United States has squandered its reputation as a safe, stable and profitable place to invest. Trump's trade war and protectionist agenda are not a benefactor for businesses, but a liability. Hostile policies targeted towards big Chinese firms have driven them away from the US market and investments, meaning they shut up shop and move elsewhere. Hong Kong, the financial centre within its own territory and the largest in Asia, has become a haven for investors to establish their capital away from the politically motivated tendencies of US regulators.
But it is not just the China factor, other businesses seeing this uncertain global economic climate, are putting curbs on the outflowing of capital. For example, US firm Bain Capital pulled the plug on a multimillion pound mega film studio investment in Sunderland, UK an outcome widely believed to be attributed to the Trumpian economic climate. Thus, as growth becomes a challenge throughout the entire world, the assets and capabilities of Hong Kong stand out like a lighthouse in the storm: It is a safe, stable, and lucrative financial centre that it is suited to free market conditions. It is therefore a secure place to anchor, for Chinese firms and international companies, amidst the geopolitical tensions.
By establishing themselves in Hong Kong, Mainland Chinese companies are able to more readily connect themselves to international markets and receive more inbound capital, as well as what CNBC's report describes as allowing them to "expand globally" and diversify their operations. While the United States is burning bridges, building walls and closing doors, China's structural response to these challenges has been to ultimately open up further and more deeply integrate itself with the global economy.
While the United States endeavours to rip up global economic integration in favour of unilateralist protectionism, China aims to do the opposite and enhance those ties. Hong Kong has therefore become the critical economic medium to do so, an indispensable strategic asset. It is the gateway between China and the world, and thus in facilitating a boom of capital it shows that those who sought to frame the national security laws as being a "deathkneel" for its status are very, very wrong indeed.
The views do not necessarily reflect those of DotDotNews.
Read more articles by Tom Fowdy:
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Opinion | Trump's new 'trade deal' with Vietnam is little more than one-sided subjugation
Opinion | Understanding China's Approach to the Middle East, and contrasting it with the US
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