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Hong Kong’s financial sector is undergoing one of the most turbulent transitionary phases in recent history with very divided views about the future of its global hub status.

Beijing’s proposed national security law has sent ripples even before implementation due to fears of its impact on Hong Kong’s autonomy and its freedoms – most specifically those fundamental to competitive participation in the financial industry and markets. While the move is reportedly targeting political dissidents, there are worries by some about the potential ambiguity of the law and how broad-based the powers enabled will be.

Meanwhile, others believe the legislation will be a solution to bringing back the same calm Hong Kong had been accustomed to prior to the protests triggered by attempts to pass the now scrapped extradition bill. A recent survey by London-based think tank Z/Yen Group said Hong Kong's financial center ranking dropped three places worldwide due to ongoing unrest.

In continuing the path to make Hong Kong the financial hub of choice, what do various asset owners, financial companies and government officials have to say? Stay or nay?

Nay: Mainland Wealth

Despite strong nationalist sentiments and political support for security legislation, wealthy mainland Chinese were reportedly less sanguine about the prospects of «asset protection». Around the same week Beijing introduced the proposed legislation, one Chinese client reportedly bought five apartments in Singapore via a newly set up family office.

«Chinese [high net worth individuals] like the law from the perspective of their love for the Chinese flag, but not from their asset protection perspective,» an unnamed banker said.

Another relationship manager from a large private bank expected post-security law capital outflows to undergo a more tedious process.

Nay: Hedge Funds

«Hong Kong as we know it is dead,» an anonymous hedge fund adviser reportedly said. «It will become just another city in China. The hedge fund community will move on to Singapore and elsewhere.» 

The potential loss of social media freedom, free internet access, capital controls, greater difficulty obtaining visas and the outlook for independence research were all cited as drivers to reconsider Hong Kong as a base for hedge funds. Most notably was eventhe suggestion that short sellers or activist investors could be at risk. 

«Mainland Chinese regulators are known for targeting foreign entities when markets fall,» the «Financial Times» report said.

Nay: Mass Affluent Hong Kongers

Outside of large asset owners, affluent Hong Kongers are also increasingly reconsidering Hong Kong as a base to hold capital. Recent offshore banking inquiries from the city reportedly rose as high as 30 percent at HSBC and Standard Chartered.

Others are even taking more drastic measures including aggressive conversion of Hong Kong dollars to hard currencies and emigration beyond landmark countries including to Taiwan, Malaysia and Portugal.

Stay: Banks

A handful of companies have publicly expressed support for the security law including, most notably, HSBC which saw its APAC chief executive Peter Wong sign a related petition. Standard Chartered also expressed public support for the legislation though it has been less featured in the spotlight on the matter.