Julie Zhu. Xie Yan and Selena Li

HONG KONG, (Reuters) – After only a short time in Shanghai as a result of a COVID-19 lockdown that severely affected their livelihoods and disrupted their daily lives, financial sector professionals are now planning to return to Hong Kong.

The financial hub of the second-largest country’s economy has seen thousands of investors, traders, and bankers confined to their homes. Many are even struggling to provide food and other necessities for their families.

Four-week-long restrictions that have kept most of the 26 million residents in the city inside has begun to impact financial transactions. Some transactions were put on hold because of logistical difficulties, executives from the industry said.

The shocking events in Shanghai shocked most people. Melvyn, Melvyn Xu is a private equity investor who moved to Shanghai late 2020 from Hong Kong.

Xu waits to see cross-border restrictions eased to make travel easier between Hong Kong mainland and Hong Kong. He also considers sending his children back home to Hong Kong’s local schools, while keeping Shanghai “a ground for employment only”.

“I believe the greatest frustration is that it is impossible to do something about it (lockdown), and this is extremely upsetting,” he stated. “For people living here, you’ve got utterly zero bargaining power.”

Shanghai’s desire to be a major financial center in Asia will suffer from an exodus. This could also spell doom for overseas investment banks, insurers, asset and wealth managers and other financial institutions that have been expanding their operations in Shanghai since China liberalized its financial system.

A WeChat posting revealed that Goldman Sachs (NYSE 🙂 wants to create close to 10 new jobs in Shanghai. JPMorgan (NYSE 🙂 has increased its Shanghai division since taking over full control last year. BlackRock (NYSE 🙂 will add around 20 people to its Shanghai fund unit.

Many bankers, traders and managers in the industry moved from Hong Kong to Shanghai as a result of its growth. They wanted to be close to clients and to gain experience in large transaction work.

These dreams seem to be at risk.

Jason Tan (Shanghai-based director, specialising in wealth and buyside fintech, at REForce group, said that once the lockdown has ended, all expats from every industry will be able to find a job outside China.

Tan stated that conversations with Shanghai’s financial professionals have raised deep concern about the locking down measures. It’s not very appealing moving forward. It is possible for this lockdown to occur again. The next time, it may be tighter and longer.

DUE-DILIGENCE HALLOWE

Work-wise, the biggest challenge for bankers in Shanghai is that they cannot conduct on-site due-diligence on their clients that are planning to go public or exploring M&A opportunities.

To verify the information, we have to visit their plants and factories. “It’s not possible to do the due diligence online,” stated a senior European investment banker who is currently working temporarily in Shanghai.

Shanghai-based senior portfolio manager said the lockdown had “profoundly” affected the city’s business climate.

According to the portfolio manager, “Shanghai operates as a Chinese financial and industrial center that is like a machine.” However, almost all adjustments were made in order for it to continue operating, even when citizens complain on social media.

Due to the sensitive nature of the matter, both the investment banker as well as the portfolio manager decided not to name themselves.