The shifting tone in Hong Kong

The tone is shifting in Hong Kong.

I spent some time in Hong Kong in the early part of September, in my first visit since May, when tariff activity from the United States was dominating discourse.

At the time, my impression from Hong Kong and broader North Asia was the mood was more negative than it should be and underplayed both Asia's strengths and its adaptability. That was not the case this time around.

Of course, the uncomfortable reality for Hong Kong is its property market continues to face challenges, as does retail spending. Trade, too, has had its issues, in line with the rest of the region. And there is probably a structural element to Hong Kong’s real-economy story.

But the markets are telling a very different tale.

{video}

Hong Kong markets have been very strong recently. Issuance has been solid, and capital inflows have been robust. That’s led to a different approach to some of the challenges.

Financial sector regulation in different parts of the world is moving in different directions. The reality of tariffs is something Hong Kong needs to adapt to and to flex with. A steely focus on what's next — understanding the challenges, and leaning into them — will be essential.

The policy-led process has been strong, with discussions focussed on what can be controlled, and on solutions, rather than fretting too much about the global issues.

Underpinning this is a dawning recognition Hong Kong is a great, multi-faceted entrepot of North Asia. And not just for trade, but also in financing and capital flows both critical elements to the economies of Hong Kong and the wider region.

In challenging times, expertise is a valuable commodity. And Hong Kong has clear expertise in adaptability and adjustment.

Richard Yetsenga is Chief Economist & Head of Research at ANZ