As recently as last November, the Hong Kong government was fretting (paywall) about a crisis-level shortage of private school places, as the territory continued filling up with expat bankers and hedge fund managers.
But some of these financiers are now heading home. As Bloomberg reports, Asian hedge funds based in Hong Kong are losing staff while their clients yank money out of China in response to that country’s slowdown and reinvest in the revitalized US markets. Meanwhile, the same newswire also reports that Hong Kong offices of global investment banks are no longer paying premiums for senior staff, but instead offering smaller salary and bonus packages than they do in New York. According to Bloomberg, top Hong Kong bankers have experienced falls in their compensation of as much as 60% since 2010.
None of this looks good for the Hong Kong economy. Though their high spending is rivalled or even exceeded by wealthy mainland Chinese tourists, expat bankers and hedge fund managers keep the territory’s high-end restaurants and bars afloat, as well as its bubbly property market. The amount of disposable income Western bankers had became highly apparent in 2009 when a restaurant in the financial district started selling a HK$3,100 (US$400) baked potato topped with caviar.
Still, early signs are Hong Kong’s real estate prices are falling. And last summer, another strong signal wealthy financiers were bracing for smaller bonuses emerged—second-hand luxury cars were spotted sitting idle on forecourts, waiting in vain for buyers from the US or Europe who now may never arrive.