Hong Kong Cements Its Status As A Premier Financial Hub

For over 150 years, Hong Kong has served as the world's gateway to China, with recent developments suggesting its role as a financial hub is continuing to evolve. Amid renewed interest in the China story and shifting conditions across other global financial centres, Hong Kong has reached notable milestones - even surpassing Switzerland in cross-border wealth flows for the first time in 2025. Strong economic growth, a competitive tax regime, and a unique legal framework are among the factors drawing fresh attention from international businesses and investors. What's behind Hong Kong's current momentum, and why do industry experts continue to view it as a strategic base for global operations?

This article is part of a series on London Insights. Other articles in this series deal with Hong Kong’s Debt Markets Come Into Their Own and Hong Kong's Enduring Appeal as an Equity Capital Markets Hub. 

For more than 150 years, Hong Kong has served as the world's gateway to China. What began as the trade of physical goods has evolved into a sophisticated two-way flow of capital, intellectual property and talent, yet throughout this period the city’s role as an indispensable intermediary remained undiminished.

It’s unique selling points have been hard to replicate: its near-autonomous “One Country, Two Systems” status within China, a respected common law legal system modelled on the UK’s, a free flow of capital and robust financial system, and monetary stability due to a four decade old currency peg to the U.S. dollar. Low tax rates, a robust but pragmatic regulatory environment and a government that invests consistently in infrastructure, talent development and public safety has made the city one of the most reliable places to run a company.

The result is a city that regularly tops global rankings for ease of doing business. “Hong Kong remains one of the world’s most business friendly cities,” said Managing Partner Timothy Loh. “Through our clients we are seeing a jump in the establishment of Hong Kong operations. The combination of a strong local talent pool, deep capital liquidity and a government that listens to industry is very powerful. Hong Kong's financial infrastructure, robust regulatory framework, and strategic role as a bridge between mainland China and the global economy means it is natural base for anyone seeking to do business not only in the region but around the world.”

That reputation is now once again drawing attention from international quarters. The city has emerged as a safe haven from the turmoil affecting financial centres along the Persian Gulf and as a hot bed of capital market activity with renewed interest in the China story.

The Numbers Behind The Name

For a city of just 7.5 million people, Hong Kong consistently punches above its weight. Take a look at it financial sector.

Its stock exchange led global IPO markets last year, with 114 companies raising US$37.4 billion, while average daily turnover hit a record US$32.6 billion. Total bank deposits rose 12% in 2025 to more than US$2.4 trillion, underpinned by the regional headquarters of many of the world's largest banks. Assets under management at regulated firms climbed 13% year-on-year to US$4.53 trillion by the end of 2024.

When measured by cross-border wealth flows, Hong Kong overtook Switzerland for the first time in 2025, with $2.9 trillion in global wealth parked at institutions in the city, as Hong Kong pressed its ambition to become the world's leading cross-boundary wealth management centre, according to Boston Consulting Group. In the international bond market, the city arranged more than US$130 billion in issuance last year, around 30% of the regional total.

Financial services employs roughly 7% of the workforce and contributes approximately 25% of GDP, making it one of four industries singled out for dedicated government policy support.

A City in Demand

A rebound in interest in China helps explain why Hong Kong’s economy is booming. First quarter 2026 GDP expanded 5.9% year-on-year and marked a near five year high for economic output. At the same time, residential rents have hit record levels as professionals from mainland China and overseas relocated to Hong Kong for work. A “Top Talent” immigration scheme has accelerated that trend and attracted more than 100,000 new arrivals.

Hong Kong’s status within China and the ever closer integration that makes its seamless for firms to do business in both jurisdictions. The Greater Bay Area, as an example, covers much of southern China and offers distinct advantages for Hong Kong-based firms selling products and services, hiring talent or investing across the $2 trillion GDP economic zone.

The structural alignment with the Chinese economy aside, for overseas companies, Hong Kong has one of the world's most competitive tax regimes, with a flat corporate tax rate of 16.5% (with a reduced 8.25% on the first HK$2 million of profits) and no sales taxes, capital gains taxes, withholding taxes on dividends, or inheritance taxes.

At the same time, despite adaptions to meet global tax developments, Hong Kong remains at heart a territorial sourced based tax system, with many profits earned outside Hong Kong exempt from tax. Hong Kong supplements these inherent edges with tax concessions in sectors such as asset management, family offices and corporate treasury. For companies accustomed to tax regimes in the UK and Europe, Hong Kong offers formidable fiscal advantages.

"Everything points to Hong Kong’s status as a business and financial centre benefitting from the geopolitical winds around the world,” said Gavin Cumming, Partner and Head of London at Timothy Loh. “More and more investors and businesses are taking advantage of Hong Kong’s reliable legal framework and attractive tax regime.”

Originally published on www.timothyloh.com