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Hong Kong: back in business

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2 minutes to read by  P.Langham, RBC Emerging Markets Equity team Jul 9, 2025

I will always remember my first trip to Hong Kong some thirty years ago. Following the nerve-wracking landing at the old Kai Tak Airport, the city’s incredible energy and vibrant atmosphere left a lasting impression. In contrast, the mood on this trip and others in recent years feels noticeably downbeat. Corporate confidence is muted, restaurants and bars that once bustled with activity are now empty, and shopping malls feel eerily quiet.

Arriving in Hong Kong, the mood feels more muted this time and the atmosphere downbeat. However, as we discovered on our trip, there seems to be a positive story emerging. Hong Kong has always excelled in re-inventing itself, and this time is no different.

Key Points:

  • Hong Kong’s upward trajectory: Hong Kong faced slow recovery from Covid and a decline in tourism, which contributed to weakened economic growth. However, the exodus of expats has stabilised, and it benefits from a low flat tax system and a light regulatory environment.

  • A financial gateway: Hong Kong handles approximately 80% of global offshore renminbi payments and is the largest offshore RMB hub. It is becoming Beijing’s preferred platform for channeling Chinese capital abroad and foreign investment into China.

  • Strong demand for listings: Hong Kong Exchanges has been seeing strong demand from mainland Chinese companies seeking a listing in Hong Kong to raise capital for their global expansions.

  • The impact of capital flows: strong flows are resulting in upward pressure on the Hong Kong dollar, which is pegged to the US dollar. This leads to a decline in local interest rates, which filters to local asset prices.
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