While never a true democracy, Hong Kong has enjoyed freedoms that have recently been reduced by the Chinese Communist Party (CCP).
Inputs that matter: According to the Council on Foreign Relations (CFR), "Chinese Communist Party officials do not preside over Hong Kong as they do over mainland provinces and municipalities, but Beijing exerts decisive influence over the region's political sphere, especially after the enactment of the National Security Law in 2020."
- In March 2024, Hong Kong lawmakers passed Article 23, an additional security legislation that further cements China's rule on the city's rights and freedom.
The opportunity: Bloomberg reports, "The Hang Seng China Enterprises Index jumped as much as 3% in Tuesday's morning session. The gauge, which tracks major Chinese firms listed in the Asian financial hub, is now close to taking its gains from a Jan. 22 low to 20%."
- "With reduced expected return for the US market, investors might be looking for places with better valuation like the Chinese one," said Thomas Ip, executive director at Gaoyu Securities Ltd., cautiously optimistic on the market and expecting more stimulus policy to come out within this year.
Zoom in: The South China Morning Post reports, "The base probability of sustainable high-quality growth at companies is falling and a valuation premium will not be justifiable, unless a company is riding an industry boom and holds an overwhelming edge over rivals, Zhang Kun, a Guangzhou-based fund manager at E Fund Management, said in an annual report."
- CNBC reports, "The Caixin Global manufacturing survey for March showed China's factory activity expanded at its fastest rate in 13 months."
Between the lines: The CFR states, "Unlike China, Hong Kong has numerous political parties. They have traditionally split between two factions: pan-democrats, who call for incremental democratic reforms, and pro-establishment groups, who are by and large pro-business supporters of Beijing."
- "Hong Kong is one of the most densely populated territories in the world."
- "Hong Kong is highly ranked in terms of economic prosperity while moderately or even lowly ranked in terms of quality of life due to pricey housing and poor living conditions," according to The National Library of Medicine.
Follow the money: The Mercer Cost of Living survey places Singapore second to Hong Kong as the most expensive city for expats.
- The Hong Kong tax rate is 15% for earning over $640,000.
- Singapore's tax rate is 15% for income of $89,000 and 22% for anything over $236,000.
Go deeper: Subscribe to the free newsletter to learn more.
Read More
- https://www.bnnbloomberg.ca/chinese-stocks-jump-in-hong-kong-as-economic-optimism-builds-1.2053964
- https://www.scmp.com/business/china-business/article/3257455/zhang-kun-chinas-biggest-money-manager-issues-stock-valuation-warning-says-days-fast-economic-growth
- https://www.cnbc.com/2024/04/01/asia-markets.html
- https://banananomics.co/chinas_wall_street_or_singapores_city
- https://www.cfr.org/backgrounder/hong-kong-freedoms-democracy-protests-china-crackdown
- https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5858288/