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| Two International Finance Center, where Mirae Asset Daewoo operates its Hong Kong subsidiary, is seen in this file photo. / Courtesy of Mirae Asset Daewoo |
By Park Jae-hyuk
The deepening political crisis in Hong Kong, following Beijing's passage of the national security law and Washington's elimination of the financial hub's special status, is raising concerns for Mirae Asset, which has used its affiliate in the city as a foothold for its global expansion since 2003.
Amid fears of a possible exodus of businesses and capital from the city, some market observers thought Mirae Asset may focus more on Singapore, another highly desirable market where the asset manager established a subsidiary back in 2012.
Sources close to the company, however, ruled out the possibility of a relocation scenario by stressing Mirae Asset will keep an eye on both Hong Kong and mainland China in terms of seeking investment opportunities.
A Mirae Asset official indicated his company will keep its operation in Hong Kong, saying, "We have a subsidiary in London, and we've maintained its operation despite Brexit."
Mirae Asset founder Park Hyeon-joo, whose official title is the chairman of Mirae Asset Daewoo Hong Kong, emphasized the importance of investments in mainland China, the world's most populous country, in a recent meeting with his company's former and incumbent PR executives.
Although investors worldwide have shifted their focus to the United States from China amid a deepening trade rivalry between the world's two biggest economies, some thought Park would be looking for more opportunities in China, which decided recently to spend $1.4 trillion over the next five years on technologies related to the Fourth Industrial Revolution.
China's Ministry of Industry and Information Technology announced in June it will spend more in the fields of artificial intelligence (AI), telecommunications and big data. Beijing, Shanghai and more than a dozen municipal governments promised to spend a collective $93.5 billion in accordance with the central government's policy initiative with Premier Li Keqiang taking a greater role in the campaign.
"Given this project could be a great opportunity for Korean businesses, they should be prepared for it," Federation of Korean Industries Vice Chairman Kwon Tae-shin said in a recent seminar.
According to the Korea CXO Research Center, Mirae Asset has four subsidiaries in Hong Kong, including second-tier ones. They are Mirae Asset Global ETFs Holdings, Mirae Asset Global Investment, MAPS Capital Management and Mirae Asset Securities.
If Mirae Asset downsizes its Hong Kong operation following the Chinese government's move to tighten its grip over the city, Mirae's investments in China could become difficult, or impossible in the worst-case scenario.
After the deployment of a U.S. Terminal High Altitude Area Defense (THAAD) system in Korea's southern county of Sangju in 2017, Lotte and other South Korean companies having larger operations in mainland China saw huge drops both in profits and sales due to Chinese economic retaliation. Major Korean exporters, such as Samsung, CJ and Hyosung, have remained cautious about exiting Hong Kong, saying they have yet to come up with specific plans for their operations there.
Concerns are still persisting over China's possible retaliation against Mirae Asset. The asset manager is involved in a costly legal feud with Dajia Insurance Group, formerly Anbang Insurance Group, regarding a disrupted $5.8 billion deal for 15 luxury hotels in the U.S.
But sources downplayed the significance of the concerns, saying the litigation would not affect Mirae Asset's business in China, because the key figures in this dispute, including the jailed Anbang founder Wu Xiaohui, are rivals of Chinese President Xi Jinping.
