Traders and fund administrators in China are panicking after the Chinese Communist Party has approved a decision to enforce national security laws intended to scare away foreign investors. Hong Kong hedge funds are exploring the possibility of shutting down their operations in the Asian financial hub.
Hong Kong is an important Asian spot whose main function is to generate investment income. Unfortunately, fund managers and traders are now worried that the sector might be the center of attention in China after the communist party approved the plan to deploy the national securities laws.
Notably, the securities laws are targeting what is known as “subversion of state power” or “interference” from foreign nations. However, if Hong Kong hedge funds were to withdraw operations, it would be at risk due to its renowned reputation as the world’s top target.
Besides, investors are scared of limitations to free internet access, social media freedom, acquisition of visas, and the capital control rates, said a top investment officer via FT.
Nonetheless, Hong Kong’s Chief Executive officer Carrie Lam, stated that people worried about the new law should wait for more information. She adds that the rules should not harm anyone as Hong Kong is a free society.
Singapore expected to overtake Hong Kong ‘s dominance of hedge funds?
As stated by FT, Hong Kong hedge funds command roughly $91 billion assets more significant than hedge funds in Australia, Singapore, and Japan combined.
Nevertheless, a third of US businesses in Hong Kong were contemplating moving them out. The business insider stated that analysts informed them that Singapore was expected to overhaul the city as operations start deviating from Hong Kong.
In conclusion, Jeffrey Halley, a senior market analyst in Asia – pacific said that if Hong Kong is initiating Chinese laws secretly then, it makes hedge funds feel insecure operating in Hong Kong. Furthermore, he stated that if businesses didn’t want to work under Chinese laws, they could move to Singapore.