Wells Fargo (WFC) is the latest financial institution to scale down its Hong Kong presence after the city passed a much-loathed, vaguely worded National Security Law that effectively outlaws dissent against the Beijing government. The U.S. bank's "Project Sun" plan reportedly will see Wells Fargo move its Asian hub to Singapore and away from Hong Kong.
Separately, fund giant Vanguard is closing its Hong Kong office and delisting its products here. Six Hong Kong-listed exchange traded funds (ETFs) will cease trading as of the close on May 10, with any remaining cash proceeds returned to investors in June.
U.S. investment banks Citicorp (C) , Goldman Sachs (GS) and J.P. Morgan (JPM) as well as their European counterparts Credit Suisse (CS) and UBS (UBS) all have far more jobs available in Singapore than in Hong Kong. It is often hard to identify ironclad plans to reduce Hong Kong staffing levels or its importance because the financial institutions do not want to anger Beijing or endanger their business in mainland China. Such moves are not announced in flashy press releases. But they're going on.
Wells Fargo, the fourth-biggest U.S. bank by assets, is quietly de-emphasizing Hong Kong while also embarking on a global overhaul. It will slowly build up Singapore as its new Asian hub by hiring more staff there while scaling back Hong Kong and laying people off here, according to the Financial Times, citing "four people with knowledge of the matter."
Four folks is strong sourcing. One staffer says the code name for the plan internally is Project Sun. Wells Fargo says it will still maintain a presence in Hong Kong.
"Suggestions we are moving our focus away from Hong Kong do not accurately reflect our commitment to the market," the bank told the FT. "Wells Fargo has a long-term presence in Hong Kong, Singapore and the APAC region, including Japan and mainland China, and we will continue to maintain that presence."
You'll notice the statement does not deny a reduction of staffing in Hong Kong or that senior roles are moving away. It just maintains that Wells Fargo wants to emphasize its "commitment" to Asia in general -- oh yeah, and to Hong Kong, too -- and keep everyone happy.
One factor driving the Wells Fargo move is the company's concern over a heftier compliance burden, now that the National Security Law has made "subversion" an ill-defined crime, as well as "secession" and "collusion with a foreign country or with external elements." The bank also wants to cut exposure to Hong Kong's super-high commercial rents and geopolitical uncertainty, two sources tell the FT.
An "external element" could quite honestly be anything, including a foreign bank. "Subversion" could be something as simple as an analyst report critical of China's economic policy or its response to the coronavirus, which it initially tried to cover up. Is it subversive to say that? A bank compliance officer may well err on the side of the lawyers and caution and say "maybe." Banks don't like "maybe."
These are the latest signs of just how badly Hong Kong has lost its way under the Beijing puppet government. Laws are enforced selectively, the political opposition has resigned, all prominent activists and dissidents have been charged with a variety of little-used laws amd handed stiff penalties for protesting against the government, and press freedom is under threat.
The latest insult is against the truth. Hong Kong Police Commissioner Chris Tang says his force will "launch an investigation right away" into "fake news," which we all know means "news that's true, but I don't like." He alleges, without presenting any evidence that's normally key to police investigations, that vague "agents of foreign forces" are active in Hong Kong to "disseminate fake news and disinformation to drive a wedge in the community, cause division in society and to incite violence."
This allegation copies language used by Beijing, which often alleges that "foreign forces" are subverting China and Hong Kong. Again, they have never presented a shred of evidence that this is happening. Is international media a "foreign force" in and of itself?
Quite ridiculously, the state broadcaster RTHK on Wednesday won a Press Freedom Award from the Hong Kong Journalists Association - and will decline it. The hard-hitting winning investigative piece looks at a 2019 mob attack in Yuen Long, in which an armed gang of triad-linked thugs attached subway commuters, some of whom they believed were returning from protests. The documentary "7.21 Who Owns the Truth" analyzed and identified the gangsters who took part based on surveillance footage and a search of license plates linking their cars to village leaders. Some Yuen Long villages are famous for their triad ties.
I watched this vicious attack streamed online, in which an organized pack of gangsters wearing a "uniform" of white T-shirts attacked unarmed subway goers with bamboo poles and metal rods. The police were suspiciously slow to respond. Crazily, the authorities concluded despite the footage we can all see with our own eyes that this was a "gang fight," when the gang was only on one side: gangsters hired to bash the skulls of pro-democracy protestors. Indeed, they bashed anyone on the subway train or who got in the way.
The highest-profile prosecution out of this event has been not of a gangster, but of a journalist. Bao Choy produced that award-winning documentary but has now been selectively prosecuted for accessing a public license-plate database to identify who owns the cars that brought the gangsters to the scene. She said she needed the information for "traffic and transportation related matters," and in the public interest you can say it was. However, she has been fined HK$6,000 (US$773) for making false statements to access information that, quite honestly, should be available and has never been hidden before.
"Bao Choy was only doing her job and collecting information in the public's interest and should never have been prosecuted, let alone convicted and fined," Cédric Alviani, the East Asia bureau head for Reporters Without Borders, says so correctly. "The fact that a journalistic investigation could become a punishable offence highlights the extent of the recent decline in press freedom in Hong Kong."
Chinese state-backed media are an increasing presence in Hong Kong, while both the mainland and Hong Kong have denied visas to independent journalists from publications such as the Financial Times, The New York Times and The Wall Street Journal. Jimmy Lai, the owner of Hong Kong's most-popular newspaper, Apple Daily, has just been jailed for 14 months for participating in anti-government, pro-democracy protests and for not getting the government's permission to hold an anti-government protest. The pro-Beijing newspaper Ta Kung Pao now says that Apple Daily should be banned, and you can bet the Hong Kong and Beijing governments are working on that. Hence, the police chief's warning he will attack "fake news."
Against that backdrop of media intimidation and censorship the critical voices in Hong Kong are gradually being silenced. Its finance industry is being whittled away, too, as civic freedoms disappear. Cities such as Singapore are a far safer bet. They are the clear beneficiaries of a trend that will happen gradually, and with little fanfare.