- Let's Get Started!
- What's On
- At A Glance
- Explore Your Future
- Major Sectors
- Key Functions
- Insight Sharing
- Job Search
- About Us
“Is the golden age over for finance in Hong Kong?”, “Should I still go into finance?” A lot of people ask me these questions nowadays. On one hand, we keep saying that Hong Kong is a premier international (or at least regional) financial center. However, we also hear stories every day about lay-offs, cost-cutting, and difficulties for graduates to enter into the sector.
Let’s look at the facts: financial services contributed around over 16% of Hong Kong’s GDP and 6% of our employment. Over the past decade, the industry has grown at 7%, which is nearly double that of the overall economy. Moreover, from a macro perspective, this should be a golden age for Hong Kong’s financial sector. With the liberalization of the RMB and globalization of Chinese institutions, we are well positioned to capture much of the growth in financial services globally.
So what’s happening? There are many forces at work and here are a few that comes to mind. First, we have to remember that globally, the financial sector has been under significant stress since the global financial crisis in 2008. New regulations have significantly changed the economics of the business. For many capital market businesses, after-tax return on equity has fallen significantly – so much so that many previously profitable trading businesses have been shut down. Asia (and Hong Kong) has not been immune to these changes.
Second, many global financial institutions have plenty of problems to deal with in their home countries. Hence the appetite to invest heavily in Asia for long-term benefits has diminished significantly. In fact, I have found that many multinational banks have lost patience with their China investments – quite a turnaround from a decade ago.
Last, with the inevitable entry from Chinese banks and securities firms in Hong Kong, the landscape has become more competitive and margins have shrunken.
This does not mean that Hong Kong’s position as a financial center is eroding. It just means that we have to adapt to a new reality. From a recent FSDC survey of financial institutions, many are looking to ramp up hiring in key positions in risk management, compliance, IT, and digital marketing. For graduates and job-seekers out there, it is critical to understand how the employment market is evolving and position yourselves for these opportunities.
I am convinced that the outlook for the Hong Kong financial industry is still very positive. But there will be many changes (and many are already underway) in the industry, and inevitably, there will be winners and losers. For those of you starting out, positioning yourself to be on the winning end of this reshuffle will be the key for future success.
Joe Ngai, Senior Partner and Managing Partner, McKinsey & Company, Hong Kong
Joe is a Senior Partner and the Managing Partner of McKinsey’s Hong Kong office. He also leads McKinsey’s Financial Institutions practice in Greater China. He has advised on various topics including strategy, operations transformation, mergers & acquisitions, organization transformation, etc. A HK native, he received his A.B. in economics from Harvard University as well as his JD and MBA from Harvard Law School and Harvard Business School.