If Hong Kong loses its status as one of Asia’s top financial centers, it would be disastrous for the Asian financial hub, said the founder and chief executive officer of Citic Capital.
There is “no lack of competition for financial centers,” said Zhang Yichen, who is also chairman at the investment firm — a Hong Kong-based alternative investment arm of the Chinese financial conglomerate Citic Group.
“I think if Hong Kong doesn’t shape up, you shouldn’t have a sense of entitlement (that) it has to be the financial center,” he said. If the territory should lose that status, it “spells disaster because that’s the only industry these days that’s competitive.”
Protests in Hong Kong erupted more than three months ago over a now-withdrawn extradition bill, which would have paved the way for suspects in Hong Kong to be sent to mainland China for trial. While the pro-democracy protests started out as relatively peaceful in June, they have since turned increasingly violent.
Hong Kong protestors on Sunday trampled on a Chinese flag, vandalized a subway station and set fire across a wide street, the Associated Press reported.
Formerly a British colony, Hong Kong returned to Chinese rule in 1997. It is one of China’s special administrative regions and is governed under the “one country, two systems” principle, which gives its citizens certain economic and legal freedoms not given in mainland China.
Zhang said the city has its advantages over other Chinese cities like Shanghai because of the “one country, two systems” policy.
Hong Kong’s legal system is similar to what is followed in a lot of countries around the world, which gives investors a certain level of comfort, he said. In addition to that, its proximity to the Chinese mainland is another plus point for investors, he added.
“From that perspective, I don’t believe Shanghai and other Chinese cities can actually replace Hong Kong,” he said. “If (Hong Kong) squanders that on its own, it’ll be a shame.”
However, the violence and chaos have crippled the city and disrupted daily life, and in turn, hurt businesses and dented investor sentiment.
Zhang said the protests have not affected Citic Capital’s business since it invests mostly either in China or around the world. “Hong Kong is just a base for us where a lot of our senior colleagues live and work,” he added.
Citic Capital says on its website it manages more than $26 billion of capital. Last month, the firm said it raised $2.8 billion in its fourth China buyout fund and would look at China-focused investment opportunities in sectors such as consumer, health care and technology.
— Reuters and CNBC’s Grace Shao contributed to this report.