Navigating global headwinds and forging resilient financial and business strategies

The Greater Bay Area (GBA) is more than the sum of its parts. Each city plays a distinct role: Hong Kong as an international financial centre, Shenzhen as an innovation hub, Dongguan and its neighbours as a manufacturing powerhouse. Together, they constitute a highly integrated economic ecosystem rivalled by few regions in the world.

At the CUHK Business School GBA CEO Forum in April, Dr Eric Lam, Senior Lecturer in the Department of Finance at CUHK Business School, convened a panel of finance leaders to explore how Hong Kong’s unique strengths bolster the GBA’s continued development. The discussion focused on the city’s indispensable role as a super-connector for global markets and capital and considered why that role has become even more critical amid profound geopolitical and technological change.

Hong Kong’s opening advantage

Setting the scene, Mr Martin Matsui, Former Chief Strategy Officer, Exchange Fund Investment Office, Hong Kong Monetary Authority, outlined the macroeconomic backdrop. He noted that consensus estimates placed China’s GDP growth at approximately 4.5% and Hong Kong’s at around 3%, both comfortably ahead of the United States at 2% and the European Union at 1% – and stronger than headlines might suggest. Combined with a relatively stable RMB and interest rates that remain comparatively lower than those in the US, China’s outlook has been assessed as stable and even reasonably positive despite ongoing geopolitical headwinds.

Hong Kong continues to be both a key contributor to and a beneficiary of China’s growth story. Referring to the city’s upcoming inaugural five-year plan, Mr Matsui observed, “The key word in the five-year plan is ‘opening’. It signals that China is prepared to further liberalise the role of the RMB and its asset markets. This is where Hong Kong traditionally has done very well.”

Mr Matsui explained that Hong Kong has played an important role “every time there is a new experiment”, benefitting from successive cross-border initiatives including Stock Connect, Bond Connect and Swap Connect. Looking ahead, he anticipated further opening measures, including the inclusion of REITs within the mutual market access framework, the Bond Connect repo arrangement and broader RMB internationalisation.

Navigating a fragmented world

The question of how GBA businesses should adapt their go-global and supply chain strategies fell to Mr Yan Xuan, Senior Fellow, The Pacific Forum. Despite the turbulence beyond its borders, he described the GBA as a setting of relative tranquillity, focused on economic development and the conditions necessary for continued prosperity.

Drawing on his experience advising companies on international expansion, Mr Yan offered three dos and three don’ts. Businesses, he argued, should develop geopolitical awareness instead of expanding blindly; build global brands rather than foreign ones by embedding themselves in host communities; and engage proactively with key stakeholders instead of moving at “China speed”, taking time to understand local needs and convert potential detractors into advocates.

At the same time, Mr Yan said businesses should not “cross the river by feeling the stones” in developed markets where rules are already defined; must refrain from ‘“being their own doctors” when Hong Kong offers exceptional legal, financial and strategic expertise; and should resist assuming that a model proven in China can be replicated seamlessly elsewhere.

Mr Yan added that Hong Kong’s institutional strengths are precisely what make the city the region’s anchor for companies with global ambitions. “The winning formula for Hong Kong is to maintain and enhance its vital role in upholding predictability, consistency, the common law system and the tradition of respecting contractual rights. If this is accomplished, Hong Kong’s impact will only grow,” he explained.

A magnet for global capital

Mr Vincent Chui, Head of Wealth Management, Asia Pacific, Morgan Stanley, emphasised that while global fragmentation remains a risk, the GBA offers a degree of predictability that few regions can match. He explained that investors look for two things above all: speed – how quickly an idea can become a product, generate revenue and achieve a market exit – and direction. The GBA, he argued, delivers both through its integrated ecosystem of innovation, manufacturing and capital, as well as through the clear articulation of its role in tech, green finance, healthcare and innovation. Hong Kong, he added, makes these advantages investable: “Without Hong Kong, these are merely opportunities. With Hong Kong, global capital can participate and, more importantly, monetise.”

Turning to the wealth landscape, Mr Chui said Hong Kong is evolving from a fundraising centre into a full capital platform. “What do institutional investors care most about? Stability, trust and assets. Hong Kong plays that role. We are no longer just a gateway. Hong Kong is now a platform that strategically connects China and global capital in a much deeper way.”

He noted that cross-border investment through Stock Connect, Bond Connect and Wealth Connect has grown significantly, and that an increasing number of family offices, alternative investment platforms and international buy-side and sell-side firms are expanding their presence in Hong Kong.

Deepening the financial platform

Hong Kong’s stability rests on financial stability, Mr Matsui explained, with no bad surprises across three areas: no bank failures, no breakdown of the linked exchange rate system and a sound, reliable financial infrastructure. He argued that Hong Kong excels in all three areas.

Mr Matsui believes Hong Kong will play a significant role in developing the RMB government bond market and advancing RMB globalisation, in line with the 15th Five-Year Plan. As offshore RMB holdings grow, he expects the government to promote an RMB yield curve, hedging instruments and improved foreign exchange crosses between the RMB and other regional currencies, enabling offshore RMB investors to put their cash to work. All of this, he suggested, reflects Hong Kong’s evolving role in shaping the GBA’s financial future.