We carry a new commentary from a senior figure in Hong Kong's wealth management industry, Nick Xiao. He has also recently joined the editorial board of this publication, adding his voice and expertise.

The following commentary comes from Nick Xiao, who recently joined the global editorial board of ClearView Financial Media, publisher of this news service. Nick is also CEO of Hywin International (the Hong Kong subsidiary of Hywin Wealth. He talks about financial sentiment in Hong Kong, how that financial centre is positioning itself after challenges such as the pandemic, its wealth management prospects, its vigorous IPO market, and more. The editors are delighted to share these insights, and the usual disclaimers apply. Please jump into the debate. 

(Note: All views contained in this article are those of the author and do not reflect the opinion of Hywin Holdings Ltd.)

To comment and respond, email tom.burroughes@wealthbriefing.com

Hong Kong prices everything efficiently
The Central district of Hong Kong has always been the bellwether for Asia.

The mood of its bankers, the rents in the Mid-Levels residential area, the discounts offered by restaurants, and the number of happy hour invitations I get, all react quickly to market indices, Fed minutes, and major geopolitical news.

Hong Kong is pricey…but we have to admit that Hong Kong prices everything efficiently.

Not all bankers are created equal
At this moment, however, we find that the moods of bankers are diverging.

Investment bankers who “originate” stocks and bonds (yes our IBD and DCM friends coming to work in Ferraris) are quite sulky. 

With the number of IPOs and number of bond issuances down 59 per cent and 52 per cent, respectively, in the first half of 2023 compared with the first half of 2019, this is an existential moment for some bankers and their teams.

Portfolio managers running Greater China strategies and IR people marketeering for alternative funds are not cheery, either.

Hedgies are particularly embarrassing and embarrassed. They are the people “long” in apologies and “short” in performance, according to clients.

Meanwhile, private bankers – and their cousins at multi-family offices – are smiling.

“Best of times”
Wealth management people (private bankers, EAM professionals, asset allocators, and trust advisors), traditionally, play second fiddle in Hong Kong’s storied Central district.

They are the “slow-motion” people who think too long, worry too much, lack killer instinct, place small-ish tickets, and don’t always understand the jargon floating out of trading rooms.

But they are doing well, and try not to talk about it, being self-effacing as ever.

As balance sheets shrink, IPO exit routes become more difficult, and institutional money gets constrained, the AuM pool under the humble stewardship of wealth management professionals has become the oasis in the desert for deal makers and unicorn breeders.

More than ever, the recurring income of the wealth management business is appreciated. “Everything is transient; only AuM is real,” says a friend who runs the North Asia business of a large firm.

“Slow is beautiful”
With growth permanently re-set (though a debatable scenario), the velocity of everything has slowed down.

With so much wealth already accumulated, with so much ambiguity on the radar screen, clients want to diversify to access new opportunities, diversify to improve portfolio performance, and diversify to “diversify.”

For the wealth managers and private bankers in Central, everything going on in the world seems a blessing in disguise.

Fluidity requires advice. Risks call for mitigation. Soul searching solicits honest counsel. Lengthened horizons need long-term thinking (done slowly and carefully).

While many things being said about Hong Kong are exaggerated, what money really wants is indeed changing.