Hong Kong’s bankers are flooding relocation agencies and search firms with inquiries about leaving the financial center following a new Chinese security law, finews.com reports.

The new legislation – aimed at acts of subversion, secession, terrorism, and collusion with foreign forces – is frequently perceived as a sweeping measure to stifle any acts deemed threatening to the state. It is sparking a scramble by Hong Kong's bankers, already hardened by ongoing unrest in the city.

«This national security law has really caught a lot of people off guard,» an anonymous recruiter specializing in private banking told finews.com. «I’ve never had this many calls about leaving. There is no pull factor – this is all push,» the person said, noting the inquiries are largely in the consideration stage.

Heightened U.S. Tension

The law's detractors fear that freedoms Hong Kong has enjoyed since a British handover to China in 1997 will disappear. Its supporters highlight its potential to provide stability in the city, which has seen frequent anti-government protests.

«This is a very unfamiliar environment for anyone who knows Hong Kong,» the source added, noting that there were inquiries from both local and expatriate workers. «It is natural for those who are capable to consider their options.» The security law has ratcheted up a conflict with the U.S., which ended Hong Kong's preferential treatment following the move. 

Target: Singapore

Due to its close vicinity and competitive financial sector, Singapore has been a natural target option for workers considering emigrating – even if it historically, it hasn't been a preference. «We are seeing not only external inquiries but also some internal ones asking about relocation opportunities from Hong Kong to Singapore,» a European banker said.

«[If not for the current situation,] this would be a bit unusual as local Hong Kongers have a historically boasted about how much better their city and lifestyle is. Many have said before that they would never move to Singapore.»

Corona Weighs on Hiring

Despite the increased interest, broadly reduced hiring activity in the market amid the coronavirus pandemic has made decision-making more difficult. According to the recruiter and the European banker, most candidates making inquiries to leave Hong Kong are still taking a wait-and-see approach.

In addition to Singapore, some have also expressed interest in Taiwan and, to a lesser extent, the United Kingdom. For their part, various foreign governments have also been actively wooing financial talent from Hong Kong as part of their response to Beijing’s tightening rule in the city via the national security legislation.

The newly enacted national security law has caused ripples in the business community with a recent American Chamber of Commerce survey claiming that 76 percent of over 183 companies in Hong Kong were either «somewhat» or «extremely concerned». With the exception of HSBC and Standard Chartered, banks have avoided taking any position.

Foreign Wooing

Shortly after Beijing enacted the law, Taiwan’s government opened an office dedicated to the migration of Hong Kong individuals and companies while its mainland affairs council minister Chen Ming-tong publicly said that it hoped to «attract capital and professionals from Hong Kong to Taiwan, especially talent in the financial industry».

Japan’s Prime Minister Shinzo Abe also welcomed financial workers from Hong Kong to boost talent diversity and transform Tokyo into a leading financial center. British PM Boris Johnson opened a pathway to citizenship for as many as 3 million Hong Kong citizens.

Mainland Exodus?

Hong Kongers and thousands of expats may not be the only ones mulling an exit: mainland workers, including bankers, are reportedly packing up to head home – or swap to foreign passports – after Beijing's introduction of a global income tax regime reportedly caught many off guard.

Under the new rules, mainland workers in Hong Kong could face a tax rate of up to 45 percent – tripling the current 15 percent. «In a nutshell, my pay is now subject to the high tax rate on the mainland but I need to cover the high cost of living in Hong Kong,» according to a «Bloomberg» report citing an anonymous executive from a Chinese state-owned bank. 

«It’s a double whammy,» this person noted. Their firm is working on a plan to provide interest free-loans or cash payouts to affected employees, according to the report.