Tuesday, March 8, 2011

Hong Kong and Shanghai Bank - once again

Britain's largest bank, HSBC, has signalled* its intention to move its headquarters back to Hong Kong where it was founded in 1895.

The bank's UK and European operations have been hindered by new taxes and regulations which have proliferated in the wake of the global financial crisis, and, of course, the European financial environment is fraught with unresolved sovereign debt and currency problems.

The move would be a major blow to London's standing as a financial center - and could be seen as symbolic of profound shifts in global wealth and prosperity away from Western Europe and the US and towards the Asian region.

HSBC's prospective move also reminds us that the time is rapidly approaching when Asian time zones will dominate global markets. Europe is particularly disadvantaged in this respect, as Asia goes to work when Europe is sound asleep. (Hong Kong - and the rest of China - is 8 hours ahead of London.)

* [added later] The signals, I must admit, are mixed. The original story - sourced to unnamed investors and carried by London's Sunday Telegraph - claimed that a move to Hong Kong was more than likely. Apparently, domicile is reviewed every three years, and the investors had noted a change of tone in favor of a move to Hong Kong. The bank has subsequently denied that any decision to move has been taken.


  1. Sounds as a bad signal for European economic.

  2. When I was in Hong Kong in 2001, it still had a British flavor to it. The High Tea at the Peninsula Hotel. The well dressed and well mannered citizens. At that point, the Special Administrative Region still allowed free press and freedom of assembly. I understand much has changed since then.

    China is an interesting experiment in trying to allow economic freedom but not political freedom. Milton Friedman argued that economic freedom was essential to political freedom. China may resolve the question whether political freedom is essential to economic freedom.

    We'll also see if HSBC lasts in Hong Kong. Google, famously, withdrew from China, but maybe that had to do with the nature of its business.

  3. Yes, tikno, Europe's economy (apart from Germany perhaps) is not looking good - sovereign debt problems, high unemployment and social problems in some countries.

  4. CONSVLTVS, I take your point about the political risks. I read an article saying that a "move to Honkers would be bonkers" largely on that basis.

    On political and economic freedom, I guess we'll have to wait and see if political freedoms emerge. I'm slightly more sanguine about China's future than you are, I think. Their version of capitalism has lifted millions out of grinding poverty and I have the sense that the Chinese leadership is at least trying to think long-term - unlike many Western leaders!

    I am not blind, however, to the failings of the current leadership - nor to certain sinister possibilities.