Is Hong Kong Back?

As Hong Kong emerged from a prolonged period of social unrest and pandemic-related business disruptions, its food, entertainment and retail sectors underwent a transformation.Today, the city’s commercial landscape sports a new look.Established chains from mainland China have taken over spaces that once catered to a more diverse, often Western-oriented clientele.How and why did this happen?As more mainland Chinese residents move to Hong Kong for work and study, businesses catering to them have sprung up. In these establishments, customers are served by staff from the mainland, who speak Cantonese with varying degrees of fluency to adapt to the local environment.Even many cabbies in the city’s iconic red-top taxis now use simplified Chinese text and putonghua (standard Mandarin) voice guidance on their Global Positioning System devices.Some call this the “new Hong Kong”.The Hong Kong that emerged after years of social, economic and political upheaval since 2019.Not simply revived, with its economy back on its feet; but also fundamentally reshaped, evolving – as always – with the times and its unique circumstances.In this new Hong Kong, the changes go far beyond the physical shopfronts in Lan Kwai Fong.Its economy is being reoriented, with mainland businesses, consumers and professional talent playing an increasingly prominent role in the city – sometimes at the expense of those from elsewhere.Its government and businesses are recalibrating their priorities as geopolitical tensions redefine the opportunities and constraints facing the territory, long positioned between China and the West.Its social fabric is being rewoven as well, as the make-up of its residents – and how they live, work, play, think, behave and communicate – continues to shift.Together, these changes paint a mixed picture of what the new Hong Kong looks like and where the city is headed. Chapter 1: Talent Brain gain; drain wanedNavin Raj Jaidev, a Singaporean newcomer to Hong Kong, is learning Mandarin through weekly lessons with a private tutor.The senior investment director at Cambridge Associates, a global investment firm headquartered in the US, became one of the first members of his firm’s investment team in Hong Kong when he relocated to the city from Singapore in July 2025.The 35-year-old is among an estimated 120,000 professionals from mainland China and overseas who moved that year to Hong Kong, a city with a population of about 7.5 million.Hong Kong has been trying to plug a talent gap after its population dropped sharply in 2020A chart showing Hong Kong’s population numbers from 2016 to 2025, with a sharp drop in 2020 before rebounding in 2022 Cambridge Associates opened its Hong Kong office to be closer to its fast-growing clientele of institutional and high-net-worth investors based in the territory and is now gradually expanding its newly established team.“I decided to pick up Mandarin, as I was moving here, signing up for my first classes in Singapore using my SkillsFuture credits,” Jaidev said, referring to Singapore’s upskilling-subsidy scheme.He chose Mandarin over Cantonese because Mandarin is generally considered easier for beginners learning tonal languages, having just four main tones to master compared, with at least six in Cantonese.“Learning Mandarin is mostly for my personal purposes of travelling in China and hoping to get around a little better,” he said.“While I’m very cognisant that I’m years away from being able to use it professionally, sometimes even making a little effort can go a long way in building personal connections.”Another Hong Kong newcomer, Frenchman Yvan Roy, arrived in August to take up a new executive role in the hospitality sector after nearly a decade working in Tokyo.The digital marketing veteran has also spent 12 years working in London and 14 in Paris.The 52-year-old secured his current job after turning down a role in Singapore, having found the city-state’s expatriate cost of living too high for his liking. He declined to disclose the name of his company, as he had not been authorised to speak to the press.“Hong Kong appears very global and comparable to the other cities I’ve lived in; I’ve heard there are many French expats here as well,” said Roy, who looks forward to hiking and sailing, given that many of the territory’s walking trails and beaches are easily accessible.“I’m planning to try the high-speed rail to Shenzhen soon, too.”Then there is Francine Wang, a Hunan native in her late 30s, who is among a growing number of mainland professionals moving to Hong Kong.She came to Hong Kong in 2024 under a talent pass scheme and had little trouble finding a job as a relationship manager at a Chinese bank, where her mainland networks and fluency in Mandarin give her an advantage.“Being able to communicate in Mandarin is a given for my role,” she said.“Much of my daily work also requires knowing how systems, processes and people work in China. Of course, local Hong Kongers and others like Singaporeans or Malaysians can do the job too – but probably not as effectively.”Office workers crossing a traffic junction in Hong Kong’s Central district. Mandarin is commonly heard among office workers on the streets of Central. Hong Kong has seen a wave of talent return to its shores in recent years.Finance professionals have relocated to the city for wealth management and China-related opportunities, contributing to a 9% year-on-year increase in corporate expansions in the first half of 2026.Local universities have also managed to attract several top scientists and academics from abroad.The inflow is helping to reverse a severe brain drain triggered by prolonged anti-government protests in 2019, the imposition of a national security law in 2020, and years of strict border restrictions until late 2022 to bring the Covid-19 pandemic under control.Among the most prominent recent relocations of top professionals to Hong Kong are those of mainland-born electrochemist Liu Jiawei from Singapore to set up her own laboratory at the City University of Hong Kong and senior personnel from London-headquartered bank HSBC.HSBC’s regional head of communications for Asia and the Middle East, Greg Lowden, who left Hong Kong in 2023, returned to the city in June 2025 after two years in Mauritius, while its chief people officer Aileen Taylor is set to arrive from London in late 2026 amid the bank’s pivot to Asia.As multinational corporations recommit to building their businesses in Hong Kong, newcomers to the city, recruitment specialists and industry insiders alike agree that the Asian financial hub continues to attract globally competitive talent.For investment professional Jaidev, Hong Kong’s biggest draw is its status as one of Asia’s premier asset management hubs, especially for hedge funds, an area he specialises in.“There is, even now, a more intense investment banking group in Hong Kong relative to Singapore,” he said.More deals are made here. More trading is done here. More global funds are basing themselves here. And you can easily find the talent here. Singaporean Navin Raj Jaidev, a senior investment director working in Hong Kong “All this means a lot more traffic of portfolio managers in Hong Kong, which makes it much more efficient for us to meet, make investment decisions and do business here,” he added.E-commerce executive Roy said his Hong Kong role was also advertised in other global cities such as London and Dubai – places he was considering relocating to.This suggests that his employer was seeking talent with an international background for the job. Mandarin speakers’ edgeWhile many expats have returned since Hong Kong reopened its borders after the pandemic, the city’s mix of non-local talent has shifted dramatically.Whereas Western expats once accounted for as much as a third of its annual intake of professionals, mainland Chinese now make up the overwhelming majority of imported talent.In 2025, a whopping 94% of the roughly 31,500 visas granted under the Top Talent Pass Scheme (TTPS) – launched in December 2022 for high earners and top graduates from around the world – went to mainlanders.Mainland Chinese applicants accounted for 94% of Hong Kong's approved Top Talent Pass applications in 2025A chart showing the distribution of Hong Kong’s Top Talent Pass Scheme holders in 2025, from mainland China to Canada, USA, Australia and Singapore Prior to the launch of the TTPS, mainland graduates and professionals came to Hong Kong largely through one of two schemes – one that catered specifically to mainland talents and another that catered to non-locals who had graduated from a Hong Kong university.In 2019, about 23,800 visas were granted to mainlanders under these two schemes.By 2025, the figure had more than doubled to over 53,000.“It is true that Hong Kong’s inflow today is less Western and more China- and Asia-centric, and therefore looks ‘less global’, if we use a pre-2019 benchmark,” said Peter Boelsterli, 65, who co-founded Bootes Consulting (Hong Kong Visa Services) with his partner Candice Wai.But the territory has not stopped attracting talent, according to the Hong Kong-based Swiss immigration consultant, who cited “a very strong increase in interest” from non-traditional regions such as Russia, Kazakhstan, the Middle East and Africa.For most of Boelsterli’s clients in recent years, however, “Hong Kong is no longer the automatic Plan A”.“Rather, it is one of several strategic options being weighed against Singapore, Dubai, selected European hubs and, aspirationally, the US or Britain,” he said.Boelsterli’s strategic advisory and visa processing firm handles a few hundred clients, both individuals and enterprises, each year across Hong Kong’s visa and employment schemes.“In a world of labour shortages and political backlash against migration in some Western countries, mobile professionals and founders are optimising for access, speed and long‑term optionality rather than just brand,” he said.Boelsterli also points to a group of professionals and entrepreneurs who seek to capitalise on Hong Kong’s strategy of helping mainland firms go global.These people are less interested in Hong Kong as an end point and more in the city as a platform to ride the international expansion of Chinese companies. Immigration consultant Peter Boelsterli The city has seen another major shift recently amid the war in the Middle East, rising cost-of-living pressures in Europe and political uncertainty in the US, Boelsterli said.“Hong Kong was able to position itself as a comparably safe and stable place and attract much more interest from people and firms wanting to relocate from the Middle East, Europe and the US,” he said.Mainland professionals in certain sectors now have a significant edge over other non-locals when it comes to securing jobs in Hong Kong, according to Alejandro Vargas, founder of global legal recruitment firm Vargas Partners.The visa approval data, heavily skewed towards mainland talent, appears to support Vargas’ claim.Leading recruitment firms, including Randstad Hong Kong, have also reported a growing preference for fluent Mandarin speakers with strong mainland networks in sectors serving Chinese clients, including wealth management, finance and tech, among other industries.Hunan native Wang, who came to Hong Kong under the TTPS, noted, however, that competition for finance jobs in the city has intensified among her fellow mainlanders, as more of them have obtained passes to work in the city.A quick search on the professional networking platform LinkedIn turned up dozens of profiles of mainland TTPS holders eagerly advertising their availability for work to prospective employers.“While Hong Kong is still attractive to people, it’s more the demand rather than the supply side that decides if they can come,” said Vargas, a Singapore-based Chilean-trained lawyer in his 40s, who has worked for top law firms in New York, Beijing and Hong Kong.A decade or two ago, many firms in law and finance tended to look beyond their preferred pool of candidates, considering those who were not from the region and did not speak its languages, because they lacked a pool of locally connected talent to draw from, he explained.“What drove hiring then was just finding the right level of talent that was willing to come to Asia; hence, the high number of Western expats in the Hong Kong of old,” Vargas said.“But what drives moves now is fundamentally different: The talent pool in the region has expanded significantly, while Hong Kong has become a smaller market after many legal and financial firms shrank and shut down in the past few years.”Travellers arriving at Hong Kong International Airport on Sept 4, 2026. Hong Kong is also so much more intricately connected to mainland China that it’s now just very hard for non-Mandarin-speaking expats to find their footing. Alejandro Vargas, founder of global legal recruitment firm Vargas Partners Several prominent US-based financial and legal firms shuttered their Hong Kong operations in 2024 and 2025, after a prolonged capital markets downturn in preceding years slowed initial public offering (IPO) and mergers and acquisitions deal activity amid rising geopolitical tensions.These included hedge fund Capstone Investment Advisors, investment bank the Raine Group and law firms Bryan Cave Leighton Paisner, Dechert and Winston & Strawn.While international law firms once regarded Hong Kong as a “regional hub”, they now view the city “more as part of their Greater China operations”, Vargas said.The city’s law firms, however, still maintain “a very high-quality pool of non-Mandarin-speaking Western talent at the senior level”, he added.“But if they leave, are they still being replenished by fellow non-Mandarin speakers? Seldom.” Lower titles, smaller movesIndustry insiders’ observations suggest that many of Hong Kong’s newcomers differ from the city’s pre-2019 expats not just in where they come from but also in their seniority and professional standing.“Where we used to have big waves of transfers to Hong Kong, now firms are spending less on their staff relocations,” said Kay Kutt, chief executive of Hong Kong-based regional relocation firm Silk Relo, a sister company of the leading international moving company Asian Tigers Group.We’re seeing mostly smaller, more budget-conscious moves. We don’t get as many senior executives as we used to, and many people are paying for the relocation themselves or possibly taking lump-sum packages for their move. Kay Kutt, chief executive of relocation firm Silk Relo “Shipment sizes and housing allowances have shrunk as well, which may reflect corporate attitudes towards relocations,” she said, adding that firms might now be relocating more single employees than families.Kutt, 66, a British national who moved to Singapore in 2023 after more than a decade in Hong Kong, noted “a much bigger inbound volume” of clients relocating to the territory from mainland China these days.“We’re also seeing a good proportion of individuals moving from Singapore to Hong Kong,” she said, adding that the city-state was also one of the top three destinations for Silk Relo clients transferring out of Hong Kong, alongside Britain and Australia.Hong Kong already faces a surplus of senior professionals, as employers seek specialised skill sets that most senior job seekers lack, according to Ben Elms, Asia-Pacific regional general manager at Hong Kong-based human resources services provider Links International.“An example is senior tech talent availability in the infrastructure space – a more traditional technology – while we are seeing an increased demand in senior AI, cybersecurity and data expertise,” Elms said.“The expectation is typically for senior talent to comprehensively reskill in their own time and with their own funds to even be considered for such opportunities, hence creating the large-scale disparity.”Shrey Parikh, founder of tech talent recruitment firm INRO Hong Kong, also noted that many highly qualified mainland tech professionals in the city were “taking massive pay cuts just to secure a contract and save their TTPS visas (before they expire)”.“This (has) created a massive talent surplus within the Hong Kong tech sector right now,” Parikh wrote in a LinkedIn post in September.The tech sector is one of the most globally competitive fields for talent, Elms said, with Singapore investing substantial public funds in tech infrastructure and Dubai pursuing major AI initiatives.Hong Kong is well placed in this battle for talent, though, the HR expert added, as it offers senior tech professionals the opportunity to work across the Greater Bay Area while granting them a 15% cap on their tax liability. The mainland’s individual income tax rate can reach 45%.The Greater Bay Area is a strategic economic zone encompassing Hong Kong, Macau and nine cities in Guangdong province, including Shenzhen and Zhuhai.“Hong Kong, Singapore and Dubai are often regarded as the most desirable locations to move to for their safety, convenience, career prospects and low taxes,” Elms said.Ultimately, in choosing among the world’s top talent hubs, it comes down to personal preference. Some pick Hong Kong for its lifestyle; others, Singapore for its space and cleanliness, and still others, Dubai for its accessibility to Europe. Ben Elms, APAC regional general manager at Links International Vargas, for example, left Hong Kong in 2024 after 16 years, relocating to Singapore for a more family-friendly environment in which to raise his young child.Another major driver of his move, he said, was that Singapore was increasing its recruitment of global legal talent at that time, while law firms were downsizing their Hong Kong offices. Lawyers, academics hitCritics say that a systematic dismantling of some of Hong Kong’s freedoms under the national security law has affected its competitiveness as a global talent hub, with the impact more apparent in some sectors.The city, since 2020, has revamped its legal and political frameworks to prioritise state security, restrict public dissent and narrow the boundaries for the media and civil society groups, driving several to shut down.People out chilling one weekend evening at the West Kowloon Art Park, a waterfront space that overlooks Victoria Harbour and the iconic Hong Kong Island skyline. For most people, this doesn’t affect their day-to-day lives. But it does play a part in foreign firms’ and talents’ decisions on whether to stay in or move to Hong Kong, as many of them come from highly democratic places. Legal recruitment consultant Alejandro Vargas on the 2020 national security law Vargas cited examples of major international law firms taking costly measures to ring-fence aspects of their operations, technology and data systems from their Greater China businesses.These moves have affected their Hong Kong offices as well, with some restricting or cutting off their Hong Kong-based lawyers’ access to their firms’ global databases, and others severing ties with their China businesses entirely.The firms included Latham & Watkins in 2024 and Dentons in 2023. Other firms have also acknowledged taking protective measures without publicly detailing their arrangements.Additionally, Vargas said the regulatory policies driving such measures are “one of many factors” that deter international firms without a Greater China presence from entering the Chinese market.Professor Simon Young, a practising barrister and law academic at the University of Hong Kong (HKU), raised the possibility that international human rights law academics may find it harder to take up jobs in Hong Kong.He pointed to the 2022 case in which American legal scholar Ryan Thoreson had his visa application rejected after being hired by HKU to teach human rights law as a tenure-track assistant professor.Appointments of international candidates at universities are now subjected to greater scrutiny. Simon Young, a practising barrister and law professor at the University of Hong Kong “For their visas, the Immigration Department will be looking more closely at their background, like whether they have manifested any sort of anti-China feelings or sentiments in their writing – in the same way we see happening in the US now,” he said.The US has also stepped up scrutiny of visa applications, including reviews of applicants' social media histories.Immigration consultant Boelsterli pointed to an outflow of largely Western academics from Hong Kong’s higher education sector, mainly in the arts and social sciences, in recent years.The city’s eight public universities reported a record staff departure of 7.6% – equivalent to 380 academic staff members – leaving in the 2022/2023 academic year. The rate has remained above 7% since 2021/2022, compared with around 4% previously.“Academic exploration and research remain uncertain after the national security laws kicked in,” said Boelsterli, himself a long-time academic in design and architecture, having taught for more than two decades in Switzerland and China.“Academics need to learn what’s acceptable here, to find the right way and right language to conduct their studies and convey their findings while being embedded in a society with such frameworks and expectations.”He noted that higher education in Europe tends to teach dialectically – seeking resolution through conflict and compromise – but “the Chinese system is very different; you try to harmonise differences in opinions much earlier”.Silk Relo CEO Kutt acknowledged that “Hong Kong has lost some of its pull for global talent”.In recent years, she said, she had received “some personal calls from legacy Hong Kong families with deep and wide roots in the city, who were discussing moving their generational wealth and leaving Hong Kong for good, for Britain, Australia or somewhere else”.Travellers preparing to leave at the Hong Kong West Kowloon station. Will those who have left ever return? The verdict is still out. Several leading global hedge funds and asset management firms in Singapore had been looking to shift their operations to Hong Kong to take advantage of its lower taxes, according to media reports in July.But they quickly put their plans on hold in August, after the Singapore government announced new tax cuts on fund managers’ profits and proposed relaxed investment professionals’ visa requirements in a bid to retain them.Speaking anecdotally, HR expert Elms said: “I have personally seen many talents who left Hong Kong in the past five to six years, who are now trying to find opportunities to relocate back here for family and work.”But Vargas, the legal recruitment consultant, disagreed.“A few have moved back to Hong Kong, but not a lot of them,” he said.“I’ve certainly not observed a reverse wave happening. That’s not true; it’s all propaganda.” Chapter 2: Economy Financial sector holds its ownThe influx of mainland Chinese talent has meant that such Chinese home buyers have dominated Hong Kong’s property market, including in upmarket West Kowloon, fuelling the sector’s recovery.Meanwhile, Chinese companies are revitalising the city’s financial sector, which had been in the doldrums for years.Zhongji Innolight, a key maker of optical transceivers that power AI data centres for companies such as American tech giants Nvidia and Alphabet, is one such company.When it rang the bell at the Hong Kong Stock Exchange on July 30, its HK$53.4 billion (S$8.7 billion) initial public offering was Hong Kong’s largest listing since 2019 – a sign of the capital market’s resurgence after a prolonged downturn.Hong Kong Deputy Financial Secretary Michael Wong said the listing reflected the strength of the city’s capital markets and their importance to global investors. The city had already recorded more than 100 IPOs in 2026.Hong Kong’s IPO and equity fund raising peaked in 2020 to 2021 and slumped between 2022 and 2024, partly due to China’s economic slowdown. IPO funds in 2025 were about six times the amount raised at the 2023 trough, setting the stage for listings in 2026.IPOs provide companies with an entry point to Hong Kong’s public markets, giving them access to growth capital and supporting stock indices, derivatives and institutional investments that drive Hong Kong’s economic growth.Financial services grew from less than 18% of Hong Kong’s gross domestic product (GDP) in 2016 to 26% in 2024. Growth stalled briefly after 2021 but resumed in 2023, while the sector’s focus has increasingly shifted towards mainland China.The rise of financial services to 26% of GDP reflects Hong Kong’s growing economic reliance on the sector, particularly as activity in tourism, retail and property remains subdued, said Byron Lam, economist and market strategist at DBS Bank (Hong Kong).IPOs are important to the Hong Kong economy as they provide companies with an entry point into deep public markets, offering access to substantial capital for future expansion and laying the foundation for a broader financial ecosystem – including stock indices, derivatives and institutional investments that drive Hong Kong’s economic growth.IPO funds raised in Hong Kong have seen a rebound since 2024, after falling partly due to China’s economic slowdownA chart showing IPO funds raised in Hong Kong from 2019 to 2025, with a sharp fall in 2020 and rebound in 2024 These sectors are among the pillars of Hong Kong’s economy, all of which took a hit during the political turmoil of 2019 to 2020, the Covid-19 pandemic of 2020 to 2023 and China’s economic downturn, although they have shown signs of recovery since the pandemic.Another key industry, trade and logistics, proved resilient during the pandemic and has rebounded since. Hong Kong remains an international trading hub, with merchandise exports and imports both growing by around 40% to date, Lam said.Beyond its traditional pillars, Hong Kong is aggressively cultivating new growth drivers – notably innovation and technology, biotech, fintech, testing and certification, and creative industries – where the government sees competitive advantages.This strategic shift towards attracting leading high-tech companies is contributing to growth in the city’s capital markets.Speaking in Mandarin at Innolight’s official listing ceremony at the Hong Kong Exchanges and Clearing (HKEX), Wong said the firm’s listing would broaden the range of hard-tech companies in Hong Kong’s capital market, in areas such as physical artificial intelligence and semiconductors, increasing the financial hub’s appeal to global capital.This growing global appeal and widening capital base were highlighted by Johnson Chui, head of global issuer services at the city’s bourse operator HKEX.Investors in Hong Kong equity markets, Chui said, fall roughly into six categories: institutional investors, Middle Eastern sovereign wealth funds, China-focused investors, Hong Kong private equity firms, Hong Kong venture capital firms and strategic investors.Foreign investors are returning to Hong Kong, many of them as cornerstone investors, who commit in advance to a guaranteed share allocation in an IPO. They include international funds seeking AI and deep-tech exposure, sovereign wealth funds and high-net-worth individuals.“Quarter by quarter, we are seeing new names that have not been… investors in the Hong Kong market coming in to participate,” Chui said, adding that a notable recent shift was the return of European capital. The mainland engineAs Hong Kong’s capital markets make a comeback, they are becoming increasingly intertwined with those of mainland China.As at Dec 31, 2025, mainland enterprises made up 58% of all companies listed on HKEX – 1,552 of 2,686 – and 79.3% of the exchange’s total market capitalisation, according to HKEX.This compares with 52% of all listed companies at end-2020, though their share of total market capitalisation was slightly lower than the 80.1% recorded at end-2020.Meanwhile, foreign firms raised about US$22 billion (S$28.2 billion) through 156 deals on HKEX between 2000 and 2025, according to the London Stock Exchange Group, compared with US$36.4 billion raised by 110 Chinese and Hong Kong firms in 2025 alone.Hong Kong has also served as a deep pool of capital for mainland companies – in August alone, Chinese tech giant Alibaba raised HK$80 billion through a landmark share placement of 710 million newly issued ordinary shares, which was nearly three times oversubscribed.Dual-listed A+H offerings – typically involving mainland Chinese enterprises issuing shares on both mainland and Hong Kong stock exchanges – accounted for a small proportion of listings by number, but, together with specialist technology listings, generated more than 70% of IPO capital in the first half of 2026.Edward Au, managing partner at Deloitte China Southern Region, attributed the growing pipeline of Chinese tech firms in Hong Kong’s capital markets to the transformation of China’s economy, which has produced more companies in AI, advanced manufacturing, biotechnology and new energy that are seeking capital in Hong Kong.Hong Kong’s GDP growth trailed that of major mainland Chinese cities in 2025A chart showing how Hong Kong’s GDP growth in 2025 lags behind Chinese cities Shenzhen, Shanghai, Beijing and Guangzhou Chinese firms turn to Hong Kong for capital because the city gives them access to an open market operating outside mainland capital controls.HKEX’s advantage lies in its close connectivity with the mainland, said Ninghui Liu, head of Asia-Pacific investment strategy and research at State Street, a US-headquartered global financial services company.“That has been a signature of the Hong Kong (exchange), its interaction with the Shanghai and Shenzhen exchanges. I do not think there is anywhere else that you have such a mechanism,” he said.Liu noted that because Hong Kong is an open market while the mainland operates under capital controls, investors can compare the share prices of companies listed on both markets, allowing for better price discovery and greater transparency, and choose when and where to trade.The volume of trading on Hong Kong’s capital markets is so large that it has given rise to an ancillary services market – an ecosystem of specialised corporate, financial and digital service providers that support listed companies before, during, and after an IPO.One such provider is Chinese fintech firm Futu, which said its corporate services arm had served 1,209 corporate clients as at the first quarter of 2026.The company also provided IPO distribution and investor relations services to 625 companies, covering more than 60% of Hong Kong IPO issuers, including Biren Technology, Cofoe Medical, MiniMax and Zhipu AI.Without the IPO (market), Hong Kong is nothing, so I think that is important. William Chow, deputy group CEO at Raffles Family Office, which is headquartered in Singapore and Hong Kong Private wealth returnsThe recovery is not confined to public markets. The private wealth and family office segments are providing a second pillar of support for Hong Kong’s financial sector.Deloitte’s 2026 market study estimated that Hong Kong had 3,384 single-family offices as at the end of 2025, an increase of 681 over two years, contributing roughly HK$12.6 billion a year to the local economy through operating expenditure alone.Liu said some of the private wealth that moved from Hong Kong to Singapore during the Covid-19 pandemic was returning. “Over the last year or two, some of the trend has been reversed,” he said.Tax incentives are part of the draw for family offices and private wealth owners. Jaidev of Cambridge Associates cited two such incentives, one of which is Hong Kong’s unified fund exemption regime, which provides a 0% profits tax exemption for eligible funds.The other is the family-owned investment holding vehicle regime, which offers a 0% concessionary rate, where the corporate tax rate is set at 0% for vehicles managed by single-family offices.Interest comes not only from the Greater Bay Area but also from foreign families setting up satellite entities here, Jaidev said.“For myself, since my relocation (to Hong Kong from Singapore) last year, I have met and tracked more global hedge funds and Asia hedge funds than I have in Singapore in the few years prior,” he said.We have also observed European and US family offices recognising that Asia is a big driver of global investment returns, and have chosen to set up their presence in Hong Kong. Singaporean Navin Raj Jaidev, a senior investment director working in Hong Kong Indeed, as noted by Cameron Harvey, CEO of Landmark Family Office, “there is a huge amount of new wealth in the region” that is driving the growth in family offices, even more so than the government’s incentives.But even as private wealth returns to Hong Kong, the US government’s Outbound Investment Security Program, which has restricted American capital from privately funding Chinese AI, semiconductor and quantum computing businesses since January 2025, has had a negative impact on the city.As Washington includes the territory within the programme’s restrictions on China, private technology investments involving Hong Kong companies have also faced significant headwinds.But the programme exempts stocks traded on public exchanges, reshaping Hong Kong’s role as a global financial hub.Zhongji Innolight illustrates the divide. On June 8, seven weeks before its Hong Kong debut, the Pentagon identified the company as having ties to China’s military, which Zhongji Innolight has denied. Still, it managed to attract a prominent group of global investors for its blockbuster Hong Kong debut, including BlackRock, an American asset management company. The missing middlePublic markets have been roaring. What is missing, however, is the pipeline that feeds them – the private market ecosystem needed to nurture companies long before they are ready to list.Liu and Harvey both pointed to the Greater Bay Area as the next driver for Hong Kong’s economic development. Hong Kong is planning to develop the Northern Metropolis as a high-tech development centre adjacent to Shenzhen to leverage its neighbour’s manufacturing strengths while building its own capabilities in areas including biotech and healthcare.Harvey noted that developing this ecosystem is key to generating new technology investment opportunities in the private markets. These companies could eventually progress towards IPOs.Au echoed the view, noting that it is crucial for Hong Kong to build a more complete capital formation ecosystem, from private capital to venture financing and IPOs.“Hong Kong is very good at IPOs, but it should also be good in terms of nurturing the future IPOs.”Looking ahead, DBS’ Lam said: “As an international financial and trading hub, (Hong Kong) should prioritise sectors that can leverage its strengths in capital markets, cross-border financing, global connectivity and professional services.”To diversify its economy into AI and biotechnology, for example, Hong Kong should leverage its financial strengths to fund innovation, attract technology investment and accelerate the commercialisation of research, he said.But “building a secondary growth engine will take time”, he added. Chapter 3: Politics ‘The Hong Kong of old is over’Economically, Hong Kong has rebounded from the depths of the pandemic years, when its economy contracted by 6.1% in 2020. It grew 3.2% in 2023 and is expected to expand by 3.5% to 4.5% in 2026.Politically, however, Hong Kong today is different from the city it was in 2019, before the introduction of the national security law in 2020 and the Legislative Council (LegCo) elections the following year. 2019 2026 Quiet streets beneath an overhead bridge in Central, in stark contrast to the scenes of the anti-government protests of 2019. ST PHOTO: BRIAN TEO, CHONG JUN LIANGThese events brought the city into closer political alignment with mainland China. The new law restricts political dissent, while the LegCo elections, held under new rules and a revamped electoral system, saw pro-Beijing candidates win nearly all the seats.These changes have prompted foreign critics to argue that the “one country, two systems” framework, which gave the city autonomy over its economy and administration following its handover from British to Chinese rule in 1997, has been eroded.US economist and former Morgan Stanley Asia chairman Stephen Roach – one of the city’s most prominent critics in recent years – argued in July that while its economy has proved resilient and its stock market has rebounded, “the pre-2019 Hong Kong of yesteryear is gone”.“Beijing’s hostile takeover following the pro-democracy demonstrations of 2019 to 2020 has transformed Hong Kong into just another big Chinese city,” he wrote.Additionally, “the rule of law, long believed to be one of Hong Kong’s greatest institutional advantages, has been severely compromised”, he stated.Critics cite as evidence the departure of numerous foreign judges, the exclusion of jury trials in national security cases, and – most recently – a legislative change in June empowering Hong Kong’s chief executive to determine whether a case involves national security.HKU Ian Davies professor in ethics Simon Young acknowledged initial concerns that the amendment could be used to override a court’s decision, potentially undermining the common law system.But the authorities have given assurances that the leader’s power would be exercised only before a court has delivered a judgment, he said.The judiciary remains independent, he noted, pointing to data on the city’s conviction rates.Hong Kong’s post-trial conviction rate across all its courts has remained stable over the past decade, averaging 55% between 2010 and 2024, although the annual rate has edged up since 2020. It hovered above 60% in 2024.A rate of around 50% to 60% could suggest that both prosecution and defence are operating within an effective judicial process. But the closer the rate comes to 100%, the implication is that the courts may be acting merely as a rubber stamp for the prosecution.The Hong Kong Bar Association has also repeatedly reassured the public that judicial independence and the rule of law in the city are “alive and strong”.Far-reaching national security laws were enacted in Hong Kong in 2020 and 2024 to punish offences such as treason, sabotage, sedition and external interference, with penalties of up to life imprisonment. These laws can also apply to offenders outside Hong Kong.Young pointed out, however, that the laws “are consistent with human rights norms”.“They have safeguards, are well balanced, and are comparable to similar laws in other countries like Britain, Australia and Canada,” he said. Still China’s shining star?Nevertheless, the cumulative effect of the political changes is that the “one country, two systems” framework has been significantly weakened in Hong Kong.The territory’s value to Beijing as a model for unification with the self-governing Taiwan has therefore diminished.This raises the question: How important is the new Hong Kong to Beijing, is it important enough to warrant Beijing’s continued special attention rather than being treated like any other Chinese city?What differentiates the new Hong Kong from cities such as the tech hub Shenzhen and the financial hub Shanghai, ensuring that it is not “just another big Chinese city”?What makes Hong Kong distinctive enough for Beijing to consider its “two systems” worth preserving?“The most useful aspects of Hong Kong to the Chinese mainland are the city’s economic leverage as a financial and aviation centre, including as a new gold exchange hub, and its common-law heritage that is still of utility to China,” according to political scientist Sonny Lo, an honorary professor at HKU and deputy director of the university’s School of Professional and Continuing Education.The territory began trials in July to establish itself as a premier global gold trading and central clearing hub, aiming to diversify its financial ecosystem and capture growing regional demand while integrating more closely with the mainland’s gold markets.Hong Kong’s common-law heritage, meanwhile, enables it to support Beijing’s foreign policy objectives, such as by providing legal support to other common-law countries participating in China’s Belt and Road Initiative through the International Organization for Mediation (IOMed), Lo said.The Hong Kong-headquartered IOMed – launched in 2025 as the world’s first intergovernmental organisation dedicated exclusively to mediating international disputes – is intended to strengthen Hong Kong’s role as a leading Asian dispute resolution hub.The city also has other mediation mechanisms for cross-border disputes, including the Hong Kong International Mediation Centre.Given these two key advantages over other Chinese cities, Lo said, “neither Shenzhen nor Shanghai can replace the special role that Hong Kong plays, so we can be quite optimistic about Hong Kong’s future”.Indeed, Hong Kong’s open financial market, which has remained largely intact despite the city’s political changes, stands in contrast to the mainland’s restrictive capital controls.Hong Kong continues to be a crucial destination for Chinese firms to raise funds from foreign investors through IPOs.As a bridge between China’s economic ecosystem and the global financial infrastructure, Hong Kong plays an increasingly vital role for Chinese companies seeking to establish a regional presence.This is evidenced by a 62% increase in the number of mainland firms establishing regional headquarters in Hong Kong. The figure rose from 216 firms in 2019 to 350 in 2025 – a larger increase than that recorded for any other non-local firms expanding in the city.The Dukling, the city’s oldest authentic wooden Chinese junk boat, cruising through Victoria Harbour against the iconic skyline of Hong Kong Island at night. Hong Kong’s greater economic integration with the mainland, coupled with the city’s more open financial system, also appears to make it more attractive to foreign companies seeking to enter China. Hong Kong remains an important base for foreign firms expanding into China, particularly the Greater Bay Area, as reflected in the 37% increase in the number of local offices operated by such firms. From 2019 to 2025, the figure grew by nearly 1,300 firms to reach 4,770.Local offices of foreign firms have seen a 40% jump since 2019, mainly driven by the legal and financial sectorsA chart of the number of local offices in Hong Kong from 2019 to 2025, juxtaposed with the number of regional headquarters “The role of Hong Kong has been changing,” Lo acknowledged. “Now it has to align itself with China’s development blueprint, focusing on the city’s economy and financial systems, free of the destructive and excessive politics of the past.”The city in September released its first five-year development plan, covering the period to 2030 and aligning with China’s traditional five-year national planning cycle. The move marks a shift towards a formal long-term road map explicitly linked to national strategic priorities.With the five-year plan, Lo explained, “Hong Kong’s capitalist system and policies will continue – but under the mainland’s socialist planning”, ensuring a more unified approach to achieving the city’s long-term vision that is resilient against leadership changes.This “hybrid” Hong Kong, he argued, is how the city will continue to remain special to China. The art of staying specialCritics, however, have questioned whether Hong Kong can sustain the unique advantages that set it apart from other Chinese cities.If Beijing were to one day lift capital controls on the mainland, Hong Kong could lose its special status as the only Chinese city with an open financial market.Still, the territory’s entrenched position as a global wealth and commodities hub provides deep pools of liquidity and institutional credibility that cannot be replicated overnight.Its common-law system and independent judiciary offer international businesses a secure, predictable environment distinct from that on the mainland.The moves in recent years to establish a gold exchange hub and host the headquarters of the China-led IOMed are aimed precisely at further cementing these strengths.Hong Kong is also developing the Northern Metropolis, a sprawling tech and business hub next to Shenzhen, to deepen integration with the Greater Bay Area’s supply chains and tech capabilities.Lo sees Hong Kong as “moving in the right direction”.But to maintain its competitive edge over other Chinese cities, he said, local officials must improve how well and quickly they implement planned policies.One of Hong Kong’s biggest weaknesses is in its policy implementation. Sonny Lo, political scientist and honorary professor at the University of Hong Kong “Everything is slow – maybe due to the need for lengthy consultations, environmental assessments, and so on.”“In the Northern Metropolis (first announced in 2021), we still have yet to see a concrete timeline for the planned building in the area and for getting people to move there,” he added.Lo noted that Hong Kong’s bureaucracy has struggled to adapt to the many changes the city has undergone since 2019.“The civil service – arguably the most important institution in securing Hong Kong’s economic advancement and positioning in the coming years – has been under immense stress and is facing adaptational problems,” he said.Several high-profile policy reversals in recent years, such as the last-minute scrapping of a seatbelt rule and a waste-charging plan, have raised questions about the bureaucracy’s effectiveness.Staying ahead of Hong Kong’s mainland competitors requires a government with stronger leadership and better coordination and communication among its departments, Lo said.“All this will take time,” the professor said.Vargas, the legal recruitment consultant, said that while he does not subscribe to the rhetoric that “Hong Kong is back”, he is now much more optimistic about its future.He believes the city, having found a new equilibrium, will benefit immensely from its closer ties with the mainland, whose economy has matured in recent years, with growth increasingly underpinned by industries such as renewable energy, electric vehicles, artificial intelligence and robotics.“All this has already led to a bit of measured growth in Hong Kong; it’s now a real, sustainable growth with long-term teeth,” he said.Ultimately, Vargas added, the tension between the “old” and “new” Hong Kong exists “more for those who knew the city as it was”.“The tension exists for them in that the Hong Kong of today may not be quite the ideal that these people thought they wanted for the city,” he said.“But the reality is that the vast majority of Hong Kong’s new young talent haven’t witnessed the Hong Kong of before. And from a purely economic standpoint, the city is set to benefit substantially from its closer links to China and its increased developments there.”