Daiwa Securities Group Inc might accelerate plans to scale back its presence in Hong Kong if the tension in the territory worsens significantly, the Japanese brokerage’s deputy chief has said.
Even before the Hong Kong security legislation was passed, Daiwa had been planning to shift some operations from the territory to the mainland once it sets up a joint venture there, deputy president Keiko Tashiro said.
“If facts emerge, such as people getting arrested one after another, we may need to front-load it,” she said in an interview. “Once the joint venture is established, we can do China business in China.”
Hong Kong’s standing as one of the world’s top financial hubs has come into question as the security legislation threatens civil liberties and fuels tensions between the US and China. US President Donald Trump this month ordered an end to Hong Kong’s special status with the US.
More than one-third of Japanese companies operating in Hong Kong are either reviewing their presence there or thinking about doing so, a survey by the Japan External Trade Organization showed this month.
About 10 percent are shrinking operations in the territory, it found.
Hong Kong’s status as a global financial center would wane after the introduction of the security legislation, Japan Securities Dealers Association chairman Shigeharu Suzuki said earlier this month.
Firms might accelerate a shift to other hubs, such as Singapore, he said.
Daiwa has already been slimming down its Hong Kong footprint, partly because its banking license in Singapore has made the city-state a more convenient place to conduct debt-related business, Tashiro, 56, said.
The Tokyo-based firm has about 2,000 staff abroad, but does not give a breakdown of their location. It has been in Hong Kong since 1970.
Still, Tashiro said there is a perception that Hong Kong will remain a “window to the world” for China.
“I don’t think financial firms need to worry too much,” she said.
Daiwa is in talks with Chinese authorities about getting approval to start its joint venture by the end of the year, Tashiro said.
Nomura Holdings Inc and UBS Group AG are among global banks that already operate such entities as China opens up its financial industry to foreign competition.
For Nomura, Hong Kong remains a “key hub” and it does not plan to review operations in the territory, Japan’s biggest brokerage said last month.
Separately, Tashiro, who oversees Daiwa’s initiatives associated with the UN’s sustainable development goals, said that Japanese companies need to add more outside directors with various backgrounds.
Women could make up half of Daiwa’s board by 2030, from about 23 percent now, she said.
“Society is growing increasingly diverse, so if companies want to keep pace, they need to incorporate diversity into an official organization like the board,” she said.
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