Warnings are being issued from all corners of the financial sector about the threat of the zero-Covid policy to Hong Kong’s long-term status as a global hub. Will the government heed their call?

Banks, insurers and even the market regulator have sounded the alarm about risks from Hong Kong’s strict zero-Covid approach, specifically underlining concerns about an ongoing brain drain.

A survey by the Hong Kong Federation of Insurers said that 30 percent of international insurers are considering relocation of global and regional teams. A separate survey by the Asia Securities Industry & Financial Markets Association released in October last year found that nearly half of financial firms were planning to move staff or functions out of the city. 

Even the Securities and Futures Commission has lamented the challenges of talent retention after reportedly losing 12 percent of its staff with the remaining employees attempting to fill the gap with 12-hour work days.

Floodgates Already Open

While the full threat of the exodus may yet have materialized, the floodgates have already opened.

Wells Fargo, Bank of America and Citi have reportedly either made plans for relocation or already shifted some staff out of the city, most notably to Singapore. J.P. Morgan reportedly lost around 20 managing directors or 10 percent of all its staff in the city. More than 10 percent of EU citizens living in Hong Kong have already exited. 

And the outflow is not limited to the international community with Hong Kongers also reportedly headed for the door. In February, the city recorded the largest outflow since the start of the pandemic with a net reduction of 71,000 people. 

Not Just Quarantine

While various industry leaders are now lobbying for a shorter quarantine period for returning travelers from 14 to seven days, including the Hong Kong Monetary Authority, there are other concerns to be addressed.

They include disruption to schooling, reported rumors of a citywide lockdown for testing and even harsh conditions from hospitalization – one anonymous British communications professional was reportedly separated from her 11-month daughter who tested positive, according to «SCMP», in what the mother described as an «inhumane» and «traumatic» event.

And the challenges are not limited to just the pandemic with a survey by the American Chamber of Commerce in Hong Kong noting that 86 percent and 80 percent of respondents claimed that they were affected by worsening U.S.-China relations and Hong Kong's national security law, respectively.  

Reopening Hopes?

Not all hope is lost.

If it is to be believed that Hong Kong is aligning itself with mainland China’s zero-Covid strategy, there are signs of potential reconsideration with the issue likely to be discussed at Beijing’s annual «two sessions» between legislators and political advisors which kicks off today.

«The ‘dynamic clearing’ […] will not be unchanged forever,» according to a social media post earlier this week by Zeng Guang, the former chief scientist of China’s Center for Disease Control and Prevention. «In the near future, at the right time, the road map of Chinese-style living with Covid will be presented.»