When will Hong Kong ease its harsh Covid quarantine laws and begin to open up again to the world?
“There are two schools of thought,” says a Hong Kong-based private banker. “A lot of white-collar workers casually say March 2022. Locals shake their head – they think nothing will happen until next November.”
A casual Monday call-around of a dozen bankers, analysts and wealth managers secured a wide range of answers.
There was one bold “March 2022, definitely” and two “spring 2022s”. But most erred on the side of caution, tipping strict rules to stay in place, even on vaccinated arrivals into Hong Kong’s once-bustling airport, until at least November 2022.
Both dates matter for different reasons.
March, because by then, revelry around Lunar New Year (February 1) and the Beijing Winter Olympics (February 4 to 20) will have abated.
And November, as it is when Xi Jinping should see his tenure as president extended to a third term, at a twice-in-a-decade Communist Party congress.
There is yet a third option: after March 2023, when Party luminaries meet again to fill a raft of senior positions, including premier, with Li Keqiang set to bow out.
No consensus
The one thing you won’t find here is consensus. Or, indeed, anyone who really knows what is going on.
“Little risk will be ventured unless all is under control,” says a Shanghai based investment banker. “That won’t be March [2022].”
Holders of specific working visas can enter mainland China; they must then quarantine for between 14 to 21 days at a state-run hotel. (Some cities including Shanghai let arrivals spend seven of those days at a permanent home).
Here is a financial analyst who plans to leave Hong Kong next summer, having wearied of the situation. “My best guess is quarantine stays in place through 2022 and most of 2023,” he says. “It is clear to me Beijing does not have a plan, for itself or for Hong Kong.”
For its part, Hong Kong requires arrivals from ‘high-risk’ countries – it is a long list that includes France, the US and Malaysia – to quarantine in a government-designated hotel for 21 days.
So – does this matter?
To Hong Kong’s foreign community, it is a big deal. Many have not left the territory for at least two years.
It is hard to see Hong Kong easing its quarantine rules until Beijing does – and there is little sign of that happening
Hong Kong is not the worst place to be stuck – but can they bear to be apart from family for one and perhaps two more years?
And if that happens, is a faster outflow of financial talent a possibility?
This one is tricky to analyse. About once a month, some foreign media source runs a story in which anonymous senior bankers gripe about a lack of business travel.
It tends to include a thinly veiled threat to move their family, or part or all of their business, somewhere else, with Singapore usually cited.
Emigration is clearly a live issue. Around 76,000 more people left Hong Kong between July 1 to October 31 than entered it, according to immigration department data posted to Webb-site, a local financial information service. There were more departures in the first half of the year than at any point since records began in 1961.
This is having a toll on the economy. House prices fell in September for the second straight month. GDP grew by just 0.1% quarter-on-quarter in the three months to the end of September and is likely to continue to slow.
Yet it is also true that bankers have learned to adapt.
One executive preparing for a trip to Singapore says she will “just quarantine on [her] return”, adding: “All the ‘we are leaving’ tales from bankers are exaggerations.”
Another senior investment banker created a rolling rota, with his Hong Kong-based, China-focused team spending four months in the mainland at a time.
“They do quarantine on either end and spend two to three months on the ground, getting as much done as possible,” he says. “Otherwise, it’s not worth it.”
Business as usual
Financially speaking, Hong Kong is pretty much business as usual. Regulators are finalizing rules around special purpose acquisition companies (Spacs).
And primary equity issuance has held up well. In 2020, 134 IPOs worth $32.6 billion were completed in Hong Kong, according to data from Dealogic. In the first 10 months of 2021, the respective numbers are 69 and $24.9 billion.
That means overall activity is lower on an annualized basis – though not by much, and with far-larger average deal size.
Going forward, the status quo is likely to stay.
It is hard to see Hong Kong easing its quarantine rules until Beijing does – and there is little sign of that happening. If anything, it is tightening them further, with tough new restrictions on arrivals announced in the last week of October.
By contrast, Singapore plans to expand its vaccinated ‘travel lanes’ to include Australia and Switzerland from Monday. Two-way corridors now allow travel to and from 10 countries, including the UK and the US.
So, to return to the initial question of when Hong Kong will ease its harsh Covid quarantine laws and begin to open up again to the world…
The answer to that, for anyone stuck in Hong Kong, is not any time soon.
