Hong Kong’s asset management industry has joined the rest of the city in cheering the end of hotel quarantine after almost three years of near-isolation from the rest of the world.
Industry players said they are anticipating more business trips and increased conference activity.
However, PCR tests on arrival will still be required which could test the commitment of C-suite executives expected to arrive for a high-profile banking summit in November. People will also not be permitted to visit restaurants for the first three days in Hong Kong.
"This is indeed very good news," said the head of Asia institutional business for a large American bank. "Although the restriction on public activities for the first three days after arrival could still be a source of frustration for some, if you arrive in Hong Kong on a Friday, then you can be out and free for the whole of the following week," he told AsianInvestor.
“I think this will help with business travel and tourism. But we should not expect tourist numbers to return to ‘normal’ levels until we move to a ‘0+0’ regime,” he added.
On Friday (Sep 23), Hong Kong Chief Executive John Lee announced that they will scrap the three-day hotel quarantine measures for overseas and Taiwan visitors starting Monday (Sep 26).
The change was made the same day that Singapore overtook Hong Kong to become the world's third-placed financial centre in the latest Global Financial Centres Index, just behind New York and London.
Beating market expectation of a “0+7” policy, the Hong Kong government replaces the current “3+4” mode with “0+3”, under which people can move freely in the city upon arrival but can’t go to bars or restaurants for three days.
“What I feel from people I know is that ‘3+4’ is already good enough for business trips, but clearly more relaxed is better,” said a Hong Kong chief investment officer of a multinational life insurance company.
But he told AsianInvestor that he may not go for any trips until early next year to avoid an expected rush after the policy change.
Meanwhile, visitors won’t need a negative PCR test result within 48 hours before departure anymore. But a series of PCR and RAT tests are still required upon arrival. If they test positive, they will be subject to quarantine in either their own residence or a government facility depending on their symptoms.
NOT PERFECT, BUT VERY GOOD
Hong Kong is working hard to reverse the damage of its global quarantine lockdown. In early November, it is hosting the iconic Rugby Sevens, as well as a high-profile financial summit organised by its de-facto central bank, the Hong Kong Monetary Authority.
For visitors coming to financial conferences in Hong Kong, it could be difficult if they are only able to eat take-out in a hotel room for the first three days, noted Carlos Casanova, senior economist for Asia at Union Bancaire Privée (UBP).
“If [the government] is trying to use that bankers conference and the Rugby Sevens as an opportunity to show the world that Hong Kong has reopened and back to business as usual…Measures today, although they are very positive, still fall short of that expectation.
"We still have some room to go to get to 100%,” Casanova told AsianInvestor.
He said he believed it could still be a concern for visitors that test positive after arrival, especially for bankers attending the November conference, as there remains a “lingering risk” of being sent to a government quarantine facility.
“[The government] still needs to iron out some details. But it should be positive for markets, especially as we are also seeing the opening-up of Japan, Taiwan and South Korea,” he said.
In the same week when Hong Kong announced the end of hotel quarantine, both Japan and Taiwan also announced the lifting of restrictions for overseas travellers.
“The message for me is that there is a general trend towards reopening in the region,” Casanova said. “There is going to be stronger growth momentum for Asia as a whole over the winter months … There's still room for surprises. But at least it's a step in the right direction.”
Boosted by the news of Hong Kong's reopening, stocks of airlines and travel agencies went up single-digit percentage points in otherwise depressed market conditions in town on Friday.
Amid global selloffs, the Hang Seng Index slid to below 18,000 points - lows not seen for a decade - at the same time as the Federal Reserve announced another rate hike and forecast more to come with a recession warning on September 21.
“We have to wait and see what [the reopening] means for the markets and how investors are balancing these reopening narratives, with the main headwinds being a very hawkish Fed and outflows out of Asia,” UBP’s Casanova said.
“So, you have factors in both directions. I think their balance might be tilted slightly in favour of Asian assets, but it will not be a very sharp increase due to the fact that it's still a mixed picture,” he said.
One head of Asia macro research at a European bank told AsianInvestor that although the policy change could, to some extent, boost market performance and business activities in Hong Kong, he believed it would not be immediate or obvious, as many events had already moved out of Hong Kong.
With Hong Kong’s biggest advantage over its rivals being its bridging role between the Chinese mainland and the world, he said he believed that it would be truly the right time to celebrate when China axes travel restrictions. Visitors entering mainland China from Hong Kong are still subject to at least seven days of hotel quarantine.
As Hong Kong reopens, “ultimately people have to believe that China will soon follow Hong Kong”, said the Asian equities head of a European asset manager.
Eyes are now on the 20th National Congress of the Communist Party of China on October 16 as to whether Beijing will show signs of relaxing its stringent zero-Covid policy.
If they choose to leave Hong Kong open to the world while shutting themselves away for longer, “that would be the worst case scenario for China and the markets”, the Asian equities head told AsianInvestor.