Continued prosperity will sustain in Hong Kong despite rising U.S.-China tensions, according to Standard Chartered CEO Bill Winters, due to «an underlying rule of law».
While regional competition will intensify, Winters believes that «Hong Kong has very strong, enduring advantages» that he believes will help hold up the city’s status as a global hub.
«Hong Kong is the gateway for capital into and out of mainland China,» according to an «SCMP» report citing Winters.
«I think that position is very secure. There is an underlying rule of commercial law that will allow Hong Kong to thrive in this environment.»
Trump-Biden Race
While a Trump victory could be «problematic», Winters expects either administration to remain «relatively hostile» to China though he also notes that Standard Chartered has benefited from supply chain reconfiguration in Asia, use to tariffs and higher costs.
«As big and as important as our China business is, we have a bigger market share in Vietnam, in Malaysia, in Thailand, in Indonesia and in India than we do in China,» he said.
«When our clients redistribute their supply chain into our other market out of China, that is a silver lining.»
U.S.-China Relations
Nonetheless, U.S.-China tensions remain high on Winter’s list of worries about the business, adding that the sanctions make «everybody’s life difficult».
«When I look at what our shareholders are concerned about, first and foremost, is how do you offset the effect of lower interest rates? That’s a challenge they put to every bank,» he said.
«Second is: if there’s an escalation of sanctions in China and Hong Kong, what does that mean for your business? Those are important questions to ask.»
Hong Kong: Lagging Rebound
On Hong Kong’s economic recovery, Winters said that signs of its emergence were beginning though it lags behind.
«I met with many of our corporate and individual clients in my time already in Hong Kong and there’s a bit of cautious optimism, which suggests investment will continue to pick up; consumer spending will pick up,» he said.
«Of course, some of the more challenged sectors – tourism and hospitality – are going to be pressured for some time to come.»
Dividend Resumption
Although Standard Chartered’s profits plunged 40 percent in the third quarter, it outperformed analyst expectations and, most notably, cut its credit impairment charges by nearly $250 million compared to the last quarter.
«We feel we are well capitalized. We feel we are well reserved. We are profitable,» Winters said.
«That means the capital will continue to accrue. All of those facts would support the resumption of distributions to shareholders at an appropriate time.»
