Hong Kong's Movers and Shakers
These cultural elite are transforming Hong Kong into the epicenter of wealth and power in Asia.
Recession? What recession? It’s 2 a.m. on Tuesday on Hong Kong’s Wyndham Street, and girls wrapped in metallic Hervé Leger bandage dresses stand outside the 7-Eleven drinking from mini-bottles of Moët, moving to music emanating from Maseratis carrying newly minted Chinese billionaires to the Dragon-I nightclub up the street. There, they’ll drop six figures in the VIP Red Room before heading back up to Victoria Peak, the city’s highest mountain, where the prices of mansions on exclusive Severn Road have surpassed even Monaco’s.
Just down the road from the 7-Eleven, expats fling off fur coats as they stumble out of the Balalaika ice bar, socialites sway onto the sidewalk smelling of the High Heel, a lemon-and-berry-infused vodka cocktail at the new French lounge Le Boudoir, and private bankers play Ping-Pong under strobe lights at Tazmania Ballroom, their shirts soaked from the multiple stops they’ve already made that evening—from Zuma, the hip London sushi import, to the subterranean speakeasy 001, then finally here to Lan Kwai Fong, the crisscross of streets that’s long been the epicenter of Hong Kong nightlife.
Three hours later, the city starts throbbing again—not with music but with money. Nearly 15 years after its handover from the English to the Chinese, the city-state of Hong Kong is beckoning international high rollers with its razzle-dazzle renaissance, and every street corner sizzles. As the sun rises, the light bounces across the harbor from the 118-floor International Commerce Center (ICC) on the Kowloon side to its sister building, the 88-floor International Finance Center (IFC) in Central, the main business district, on Hong Kong Island. Investors, bankers, fashionistas and filmmakers speed-walk to their power breakfasts as recent grads ride elevators tens of stories up to recruitment wings at Deutsche Bank, J.P. Morgan and megastore Lane Crawford, all decorated with millions of dollars in emerging Asian art. Hong Kong is a boomtown, and its pulse is still racing from the night before.
In a year when Hong Kong IPOs have already raised a record $12.8 billion, almost double what was raised for the same period the year before, Chinese cash is moving across the border at warp speed, driving spending up more than 30 percent. Low interest rates in the United States have meant free money for Hong Kong, whose currency is pegged to the U.S. dollar. In fact, the government here has amassed such a sizable foreign reserve that this fall it will begin distributing 6,000 Hong Kong dollar (HKD) payouts, roughly the equivalent of $770, to every adult permanent resident.
“Because it has the least interference from government in the maximum market, Hong Kong has always been uniquely successful,” says Sir David Tang, creator of the Chinese-chic fashion label Shanghai Tang. “Mainland China has been chiefly responsible for the boom,” he continues, noting a tenfold increase in Chinese tourism in the last ten years. “Without China, Hong Kong would’ve collapsed.” At first, the Chinese takeover in 1997 caused fears of tightened government regulations, which led to a mass exodus of expats, but the aftermath has had the opposite effect and driven the economy full-steam ahead. (As one of China’s two “special administrative regions,” or SARs—the other is Macao—Hong Kong is guaranteed a certain degree of economic and political independence from its sovereign to the north, at least until 2047.) “IPO tourism,” in which companies from all over the world go public in Hong Kong to capitalize Chinese investment, brand exposure and possible higher valuation, has turned this 426-square-mile city-state, with a population of just over seven million, into an international playground. And while Hong Kong has always been a financial capital, China’s exponential growth in the past two years has catapulted the city into overdrive.
According to Michael Fung, chairman of the J.P. Morgan Private Bank in Asia, this is just the beginning. In a conference room on the 27th floor of Chater House, an office tower in Central where many banks and investment firms are based, Fung describes the new “incubating wealth” his company is now positioning itself to serve. “We’re finding that with the emerging wealth in Asia, there are many clients whose actual worth may be hundreds of millions, but they’ve reinvested it in hotels, coal mines and factories, so their liquid worth is only a few million,” he says. “But this incubating wealth will be important, because one day their companies will IPO.” It is this group of Chinese millionaires and billionaires who are only now beginning to travel and spend in Hong Kong. “They’re starting to taste a bit of their own success and wealth.”
At the moment, it’s real estate that is making headlines. Seated in the living room at his home on Victoria Peak, or “The Peak,” as it’s known locally, Tang mentions that a business associate called just that morning to say he’d bought a $120 million piece of property on the leafy southern end of the island—in addition to two other mansions nearby—and was planning to tear everything down so that a world-famous architect could build him a house. “I cannot tell you how rich these people are,” says Tang. “They make the Russian oligarchs look like kindergartners.”