(Bloomberg) — Hong Kong’s stringent Covid restrictions turned the city into a dead end for the legions of finance workers decamping for other destinations. Those who choose to stay are being presented with the sort of opportunities that don’t come along very often.
Interviews with headhunters, executives and employees across the finance and digital-asset industry depict intense competition for tech-savvy workers who are willing to endure life in a city that’s largely isolated from the rest of the world. For such people, opportunities abound for big promotions and big pay increases — at least in the short term.
“When there’s a shortage of talent, people use this as an opportunity to bid up their wages,” said Christine Houston, the managing director of executive search firm ESGI who focuses on the finance industry. “They’re more in demand than they’d been a year ago.”
Typically, finance workers in Hong Kong would get roughly a 15% “walking across the street money” pay increase to compensate for the risk of moving to a new employer, Houston said. Now, it’s “certainly no less than 20% to 30%.”
The number of new visas issued to foreign financial-service workers fell to 2,569 last year, down almost 50% from 2018, calculations based on government data show. And that was before the omicron Covid variant penetrated Hong Kong’s defenses, prompting the government to unleash some of the world’s strictest social-distancing curbs.
More than 140,000 more people have departed Hong Kong this year than arrived, one of the biggest emigration waves in the city’s history and almost four times the total for all of 2021. Many were driven away by quarantine policies that in some cases separated parents from their children, and the threat of a mass testing drive accompanied by a citywide lockdown. Others were fed up with lengthy quarantines that made business travel and visiting family overseas impractical.
While Chief Executive Carrie Lam recently changed tack, postponing the testing plan and shortening hotel quarantine for inbound travelers to seven days, the damage had already been done.
An individual or a family might take anywhere from weeks to months to emigrate, depending on whether they’re willing to leave without a job. But companies operate on much longer time horizons, and executives are fearful of redeploying large numbers of employees to other locations only to see the local market pick up again.
And Hong Kong has bounced back sharply before. In early 2003, life ground to a near-standstill during the short-lived SARS virus outbreak, and the benchmark stock index hit a 4 1/2-year low. The following year, China made it easier for its citizens to visit the city and the economy took off, ushering in a boom that lasted until the global financial crisis.
In Hong Kong’s case, there’s an added complication: Companies are wary of alienating Chinese government officials, who are exercising greater influence over the territory after the mass protests of 2019. Many of the Wall Street banks occupying the glass-and-steel towers of the Central business district are drawing up ambitious expansion plans for the mainland market.
Financial-industry pay inflation has been a “significant issue” over the past 15 months, and has accelerated this year as the wave of departures sparked a bidding war for remaining talent, said John Mullally, regional director at Robert Walters in Hong Kong.
That might leave those who extracted outsized pay increases exposed to a sharp reversal should Hong Kong return to being a big draw for expatriates — or if companies do start shifting jobs elsewhere on a major scale. A recent survey by the European Chamber of Commerce in Hong Kong found that almost half of half of European companies polled plan to partially or fully relocate operations and staff out of the city.
Another issue is is that some people are now getting overpaid, Mulally said.
“In the short term, there is definitely opportunity for people to take advantage of the market dislocation,” he said. “In the long term, it’s not a good thing.”
“It’s a Talent War”
Adding to the battle for talent is Hong Kong’s burgeoning crypto industry, which spawned unicorns like Amber Group and Animoca Brands. The sector currently accounts for at least one in 10 new job opportunities in financial services, said Olga Yung, a managing director at Michael Page Hong Kong.
Take crypto-trading platform Amber, which last month raised $200 million from investors including Singapore’s Temasek Holdings Pte at a $3 billion valuation. Its global headcount has expanded fourfold since February 2021, and it is looking for staff in Hong Kong with backgrounds ranging from traditional finance to human resources and legal services.
“Given our profitability, frankly speaking, we can pay as well if not better than anyone,” co-founder and Chief Executive Officer Michael Wu said in an interview, without providing specifics. “It’s a talent war.”
Cynthia Wu took a small pay cut when she left Hong Kong’s stock exchange operator in 2018 for a job in crypto. In the early days, there were instances where new hires didn’t even show up for their first day of work, such was the skepticism about the industry, said Wu, who’s now head of business development at crypto startup Matrixport.
Even with the sector increasingly becoming part of the financial mainstream and offering compensation packages that are competitive with traditional finance firms, it still confronts a talent shortage, she said. Matrixport is seeking to expand its team of around 40 people in Hong Kong.
A Return to Glory?
A senior executive at a top Wall Street bank in the city, who asked not to be named due to the sensitivity of the issue, said the stream of departures means mid-level workers in sales and trading have been getting pay increases in the 25%-35% range since June when they move to similar jobs at other firms.
Movements between banks have slowed slightly in past months because of market volatility and the war in Ukraine, but it’s expected to bounce back this year as trading revenues recover, the executive said.
The scramble for talent has been good for Houston’s headhunting business too. After a “stagnant” 2020, revenues are back to 2018 levels, before the mass unrest of 2019 ushered in a period of political turmoil and uncertainty that persists to this day. And she predicts that if Hong Kong’s leaders can chart a path out of Covid Zero without the frequent policy changes that have vexed locals and expats alike, the city will once again become a magnet for finance workers.
“If there’s a road map put out, and if we’re sure they won’t flip-flop again, once you get that, I am telling you Hong Kong will pick up immediately and people will start coming back,” she said.
(Updates with survey of European companies in 12th paragraph.)
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