Macroeconomic Research At Hang Seng Bank

How Hong Kong's banking giant approaches financial strategy


Thomas Shik joined Hang Seng Bank in 2007 and was promoted to Chief Economist and Head of Economic Research of Global Markets in 2017. Specializing in macroeconomic research, his primary responsibilities include analyzing economic developments in the US, Europe, mainland China, and Hong Kong; providing economic forecasts and writing research reports. Thomas holds a first-class honors bachelor’s degree in Economics and Finance from the Hong Kong University of Science and Technology and a master’s degree in Economics from The Chinese University of Hong Kong.

Ahead of his presentation at the CFO Rising Summit this April 18-19 in Hong Kong, we sat down with Thomas to discuss Hong Kong's global position and the role of businesses like Hang Seng Bank within it. 

Hong Kong's economy is ranked number 1 out of 43 countries in the Asia–Pacific region, with its overall economic freedom score well above the regional and world averages. How has Hong Kong's economy managed to remain so resilient, and how, if at all, has this affected the banking industry?

Hong Kong is one of the world’s freest economies. This enables businesses to explore new opportunities and attract talents and help them develop their true potential, which in turn bring resilience to the economy. In addition, located at the south of China, Hong Kong’s geographical position also helps. Until recently, many parts of the world have suffered from the long-lasting impact of the 2007-08 global financial crisis, but the rate of growth in China as well as in other Asian countries have still been relatively high. This has helped the city to withstand ongoing economic challenges, and its resilient growth has strengthened Hong Kong’s banking system as a whole and its position as one of the world’s key financial centers.

After more than a decade at Hang Seng Bank, what are the biggest challenges you've experienced in Hong Kong's banking industry? Can you think of any specific examples that affected not only Hang Seng, but the banking industry as a whole?

The biggest challenge for the banking industry in the past decade is how to cope with the changing, but also increasingly tightening, financial regulatory environment. Because financial markets are intertwined and banks usually have presence in multiple countries, even banks in Hong Kong have come under increased regulatory scrutiny. For banks to do a transaction, there are now staff in legal, compliance, risk management, internal control, and audit behind. Facing higher costs as such, banks have to adapt as soon as they can and find ways to execute and deliver.

(Graph courtesy of the Financial Times)

Hong Kong's economy had a great year in 2017, with a GDP growth between 3.5 and 3.7%. Do you expect to see the economy continue this growing trend? And how does this compare to what you have seen in the banking industry?

2017 was a good year for Hong Kong, which benefited from an improving global economy. Last year US growth gathered steam, the Chinese economy stabilized, and the Eurozone recovery became more sustainable. I expect Hong Kong growth to slow from the high base last year to nearly 3% this year, which however is still a healthy pace. With low unemployment rate, domestic spending has been strong, and trade activity is on the rise on the back of the stronger global economy. The banking sector has also witnessed improvement, with rising activity in trade finance, wealth management, etc.

In your biography, you mention that you specialize in macroeconomic research. Can you briefly explain to our audience what that means, and what you do specifically to help Hang Seng Bank succeed?

Macroeconomic research is about monitoring global economic developments, analyzing data like GDP, inflation, unemployment, etc., and forecasting changes in central bank policy. To many, analyzing data may be a boring thing. But to me, this helps me to see through the economic trends, which could be closely related to our daily lives. For example, when an economy is in good shape, consumers and businesses tend to spend more. This helps drive unemployment down and wages up, and the central bank may have to consider shifting to a tightening policy stance. In Hang Seng, I provide economic advice for the management team and share my understanding of the global economy. For the banking business is sensitive to the economic environment and interest rate changes, our role could facilitate the management team’s decision-making process.

What information can attendees expect to take away from your presentation at CFO Rising Hong Kong?

Participants could understand how we see the global economy going forward and explore where the potential business opportunities are. As the macroeconomic environment is connected with the financial markets, attendees may also get a sense of the interplay between economic data, currency movements, and asset class performances.

Find out more from those at the cutting edge of finance at the CFO Rising Summit this April 18-19 in Hong Kong. To see the full schedule, click here.

Trade wars small

Read next:

How Trump’s Tariffs Will Affect US Stocks