Hong Kong needs to allow free travel to retain financial hub status, report says

Hong Kong needs to allow financial sector employees to travel freely to retain its global investment and banking hub status, an industry report said, as the city continues to maintain some of the strictest coronavirus regulations in the world.

Hong Kong remained a key regional market but it was facing "some of its biggest challenges to date", said the report from the Alternative Investment Management Association (AIMA) and PwC released on Tuesday.

The Chinese special administrative region is the largest hedge fund centre in Asia, the report said, with more than half of the major funds that have at least US$1 billion under management in the region located in Hong Kong.

But travel restrictions and border closures has led to an exodus of residents from the city in the last two years, with the financial services sector facing a 'brain drain' of talent.

"Against increasing competition and global challenges, including the pandemic, more should be done to maintain the city's competitive advantages and to build an even brighter and resilient future," the report said.

"It is critical that a delicate balance is struck giving proper recognition to Hong Kong's stature as an international financial centre and broader local public health considerations."

Hong Kong has reported more than 1.2 million coronavirus infections and around 9,400 deaths, according to government statistics.

While the city has escaped the death tolls of other major centres, Hong Kong is one of only a handful of cities left to still implement quarantine with inbound travellers required to spend seven days in a designated hotel at their own cost.

A rule that banned individual flights for bringing in passengers infected with the Covid-19 virus was relaxed last week after the city's government said the ban caused "unnecessary trouble" and inconvenience to residents.

Quarantine rules and flight bans have meant business travel to Hong Kong has flatlined and global bank chiefs have mostly avoided travelling to the city since 2020, even while visiting rival regional financial hub Singapore in recent months.

Hong Kong has recorded net outflows of more than 140,000 people since the start of the year, according to official statistics. It is unclear how many have left temporarily or permanently.