Is Hong Kong’s Financial Hub Status at Risk?

Is Hong Kong’s Financial Hub Status at Risk?

by March 22, 2024

Globally, Hong Kong has made its mark as a financial hub alongside Singapore and Dubai. These city-states, while rivals in certain aspects, each present distinct strengths and face unique challenges, embodying the intricate dynamics of both local and global influences on their roles as financial centers.

As these cities navigate the challenges and opportunities of the 21st century, they offer valuable lessons on the importance of adaptability, strategic planning, and governance in securing a place at the global finance high table.

Through their successes and setbacks, Hong Kong, Singapore, and Dubai continue to shape the contours of the global economic landscape, demonstrating the multifaceted nature of financial leadership in a rapidly changing world.

This report by CARMA offers an analysis of Hong Kong’s financial industry in 2023, shedding light on the factors impacting its status when compared to its peers, Singapore and Dubai.

Hong Kong financial hub balances prosperity and pressures

Hong Kong Financial Hub

Hong Kong has historically been celebrated as a global financial powerhouse. Its strategic geographical position, robust regulatory framework, and dynamic market have attracted many international businesses and investors.

In 2023, despite geopolitical tensions, regulatory shifts, and a changing media narrative, Hong Kong maintained significant coverage in global Tier-1 business titles, underscoring its continued relevance in the financial world and as a financial hub.

The city’s stock exchange, HKEX, retained its crown as a premier destination for Initial Public Offerings (IPOs), even as the number of listings declined from previous years.

It is noted that 20 percent of Hong Kong’s financial news coverage is centered around IPO activities, reflecting concerted efforts to rejuvenate its global stature and attract strategic investments. Alibaba’s Jack Ma’s visit in January further bolstered Hong Kong’s appeal to tech companies eyeing IPOs and expansion.

Singapore and Dubai, while trailing in terms of IPO volume, also demonstrated a keen interest in enhancing their capital markets, reflected in 15 percent and 14 percent of their respective financial news coverage.

Reopening borders with China was a pivotal moment for Hong Kong, positively impacting its GDP and signalling a resurgence of economic activity. Nonetheless, China’s tightening grip cast a shadow over Hong Kong’s autonomy, inciting political unrest and contributing to a perceived erosion of freedoms.

Steadfast in the spotlight

Hong Kong Financial Hub

Singapore’s narrative is markedly different. It leads in cross-border investment, with international media outlets frequently spotlighting its conducive business environment.

This global recognition is not unfounded; the city-state’s strategic positioning, regulatory clarity, and robust infrastructure make it a magnet for international businesses and investors seeking a reliable foothold in Asia.

Unlike Hong Kong, Singapore’s media landscape is predominantly international, underscoring its status as a global financial hub. This external focus mirrors the city’s outward-looking approach to growth and innovation, positioning it as a stable and secure haven amidst regional uncertainties.

Singapore’s leadership in creating a conducive environment for business is not by chance but by design. Its regulatory framework, ease of doing business, and proactive stance on technological innovation make it a safe harbour for investors and businesses looking for stability and growth in Asia.

Rising as a versatile financial hub

With its ambitious vision and rapid development, Dubai is emerging as a formidable force in the financial domain. The city’s hosting of COP28 catapulted it into the limelight, drawing global attention to its commitment to sustainable financing and ESG investing.

This strategic positioning is further bolstered by its aggressive push in the cryptocurrency sector and a strong local media presence that promotes its economic potential.

Dubai’s narrative is one of bold ambition and strategic positioning. It leverages high-profile events and regulatory advancements to attract global investment and innovation. This approach has seen it steadily climb as a financial hub, challenging established norms and setting new benchmarks.

The crypto conundrum and ESG evolution

The tumultuous world of cryptocurrencies has seen all three cities navigate the delicate balance between innovation and regulation. The dynamic realm of cryptocurrencies presents opportunities and challenges for Hong Kong, Singapore, and Dubai.

Each city’s approach to balancing innovation with regulation reflects its broader strategies toward financial market development. Hong Kong’s efforts to establish itself as a leader in crypto trading were marred by the JPEX scandal, shaking its financial reputation.

Conversely, Singapore and Dubai made strides in embracing digital finance, with both cities issuing new licenses to crypto firms and emphasising innovation in blockchain and AI.

Hong Kong’s risk-based regulatory approach for Virtual Assets (VAs), established on 1 June last year, mandates that VASPs meet stringent criteria to ensure investor protection and address money laundering and terrorist financing risks.

Under this regime, two platforms have already secured licenses to offer Bitcoin and Ethereum trading to retail investors. Hong Kong VASPs operational before the 1 June initiation of the licensing system were given a transitional period to comply, which ends on 29 February. The arena has 24 crypto exchanges, but the outcome remains uncertain.

As of 24 January 2024, Singapore has given 19 crypto service providers the green light. These entities comprise 17 Major Payment Institution licensees and two Standard Payment Institution licensees.

Sustainable financing and ESG investing have become battlegrounds for innovation and leadership. Hong Kong’s pioneering efforts in green bonds contrast with Dubai’s strategic positioning through COP28, showcasing the diverse approaches to integrating sustainability with financial services with a pledge to mobilise AED 1 trillion in sustainable finance by 2030.

Meanwhile, Project Greenprint, initiated by the Monetary Authority of Singapore (MAS), aims to improve ESG data reporting using technology. Its digital platform,, will centralise ESG data, simplifying reporting for businesses, especially SMEs. Supported by partners like HSBC and Microsoft, it will use AI to fill data gaps, making ESG reporting more accessible and reliable.

These efforts highlight a collective movement towards responsible investing, emphasising the need for financial hubs to adapt to global shifts towards sustainability.

Reflections on Hong Kong’s reputation as a Financial Hub

Charles CheungHong Kong Financial Hub

Charles Cheung

Charles Cheung, General Manager of CARMA Hong Kong, offers insightful reflections on the nuanced fabric of financial hub reputations. The challenges and opportunities facing Hong Kong, Singapore, and Dubai highlight the complexity of maintaining and enhancing their standings as global financial centres.

Despite its challenges, Hong Kong remains a resilient and critical player in the global financial ecosystem. The city’s extensive financial coverage is a beacon of global interest, reflecting its pivotal role in international finance.

Singapore’s unwavering stability and secure environment continue to bolster its reputation, attracting businesses and investors seeking refuge in a turbulent regional landscape.

Dubai’s meteoric rise, powered by strategic initiatives and a keen embrace of innovation, has made it a burgeoning financial powerhouse.

The road ahead

The comparative journey of Hong Kong, Singapore, and Dubai through the landscapes of IPOs, cross-border investments, cryptocurrency, and sustainable finance paints a picture of three dynamic, evolving entities.

Each city-state is navigating its unique challenges and opportunities, propelled by internal strategies and influenced by external global factors.

As these financial hubs evolve, their stories of resilience, innovation, and strategic foresight continue to shape the contours of the global financial landscape.

In a world of uncertainty and change, Hong Kong, Singapore, and Dubai are beacons of ambition, navigating the future with caution and courage.

Featured image credit: Edited from Freepik