14 ASIAN LEGAL BUSINESS – DECEMBER 2023 WWW.LEGALBUSINESSONLINE.COM COVER STORY It was supposed to be the year of the grand comeback for the international financial hub. Three years of COVID might have choked its economy, and geopolitical perils might have maimed its investment allure, but Hong Kong was confident of reclaiming the place it staunchly believed it deserved when striding into 2023. But as the year drew to a close, there was a sense of sameness. To the dismay of the Hong Kong Stock Exchange, once Asia’s foremost fundraising powerhouse, the much-touted revival struggled to get off the ground. Hong Kong’s once “free-for-all” capital market is now an arena testing the survival of the fittest. On the face of it, some aspects were reminiscent of Hong Kong’s heydays. “International firms who are strong in capital markets – Davis Polk, Freshfields, Clifford Chance, to name but a few – are still dominating the market, especially after the reopening of the border after COVID,” says Eric Chow, managing partner at Eric Chow & Co. in association with Commerce & Finance Law Offices, one of China’s Red Circle firms famed for capital markets work. But scratch a little deeper, and the picture starts to change. A number of international firms chose to cut staff in response to dampened market conditions. Linklaters cut at least 20 junior attorneys in China and Hong Kong, while Clifford Chance shed four associates in the debt capital market practice, U.S. firms White & Case and Kirkland & Ellis HONG KONG: ‘ADAPT OR DIE’ The pandemic might be (almost) over, but the sense of unease remains strong in Asia’s legal industry. While life might have returned to normal, and supply chains appear back on track, the region is continuing to experience uncertainty over slowing global economic momentum, tightening monetary policy affecting credit growth, and lingering concerns about inflation. China’s seemingly irreversible economic decline is also hanging heavy. As M&A transactions dry up and capital markets remain patchy across the region, law firms have responded in a variety of ways. Some have taken the prudent road and looked to scale back their presence, including well-known international firms in Greater China. Others realise it could pay off to be bold at a time like this. As a result, we have seen the landscapes of key legal markets in Asia begin to shift in clear directions, with the momentum expected to accelerate in 2024. BY SARAH WONG AND NIMITT DIXIT STATE OF THE MARKET
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