Hong Kong's Stock Market Plunge Forces Brokerage Shutdowns
Hong Kong's stock market slump, with the Hang Seng Index heading for a fourth year of declines, has led to a wave of brokerage closures, with 30 local brokerages shutting down this year and a record 49 closing in 2022. The prolonged slump, along with job losses in the financial industry, raises concerns about the future of Hong Kong as Asia's top international finance center. Small and medium-sized brokerages are particularly affected, and the lack of liquidity in the market is driving up trading costs for institutional investors. The IPO market is also experiencing its worst year since 2001. The downturn in the market, coupled with a struggling economy, weak consumption, strained US-China ties, and a property crisis, has led to foreign funds fleeing Hong Kong and China. The lack of liquidity and a drought in deals are further exacerbating the market's troubles. Wall Street banks have been downsizing in response, and the hiring market in 2023 is expected to be the toughest since the global financial crisis. Hong Kong's government has taken steps to stimulate trading, but the high borrowing costs and weakness in mainland China's economy remain challenges. To revive Hong Kong's stock market, US monetary policy needs to shift from tightening to loosening, and Beijing needs to introduce more aggressive easing.