Japanese Government Wooing Hedge Funds Away from Hong Kong
The ongoing crisis in Hong Kong has hedge funds eyeing Singapore and Tokyo
The Hong Kong political crisis has certain hedge funds looking for an exit. A delegation from Tokyo’s financial industry has organized meetings to lure these funds to move to Japan.
The Financial Times reports that Tokyo governor Yuriko Koike has blessed the delegation’s efforts. Though the group has kept its meetings with money managers private, the secret has emerged.
The report states that the Tokyo delegation has targeted several hedge funds with more than $1 billion in assets. The group will first target hedge funds that relocated from Japan to Hong Kong after the 2008 financial crisis or the 2011 earthquake.
The Hong Kong Political Crisis and Hedge Funds
The 2019 Hong Kong protests started in March 2019 after the local government introduced the Fugitive Offenders amendment bill. This bill would have allowed the local government to extradite criminals and fugitives to places where Hong Kong lacked extradition agreements. These destinations would have included Taiwan and Mainland China. Protestors believed that this law could erode and ultimately eliminate the “one country, two systems” principle of the region.
The protests in 2019 have resulted in two deaths and multiple suicides. The situation has devolved into cases of police brutality, extreme violence, and increased uncertainty about the future.
Meanwhile, Tokyo officials are presenting themselves as a “bastion of stability,” according to the FT report. The government is trying to not only woo these hedge funds but also to beat regional rival Singapore in this recruitment. It has also pitched the idea of government subsidies to reduce costs associated with back-office outsourcing.
Finally, some worry that Singapore has a low-tax advantage that could drive these managers to this region instead.
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