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Illustration: Sarah Grillo/Axios

The romance between private equity and Hong Kong may be over, before it even had a chance to begin.

The state of play: Hong Kong officials in February announced plans to introduce a new carried interest tax scheme that is expected to be one of the world's most generous. This came on top of Hong Kong's existing effort to implement a limited partnership fund regime — all of which could make the city a more viable alternative to the Cayman Islands, particularly for Asia-focused funds.

  • This week, Beijing passed a new security law for Hong Kong that effectively eliminates many of the civil rights that local residents have long exercised. It also increases the likelihood that foreign nationals, including fund managers, could be arrested for vaguely defined offenses, and sent to mainland China to stand trial.
  • As Axios' Bryan Walsh wrote yesterday, the law "casts doubt on the future of the place that has long branded itself as 'Asia's World City.'"

What's next: We're still awaiting specifics of Hong Kong's new carried interest tax treatment. In the meantime, expect rival jurisdictions like Singapore, and maybe even Japan, to wine and dine private equity executives.

The bottom line: Private equity isn't a full-fledged avatar for global business, but it may become one of the first to loudly signal whether the new security rules overwhelm the city's financial benefits.

Go deeper

Aug 26, 2020 - Health

Hospitals charge a lot more when Wall Street owns them

Illustration: Aïda Amer/Axios

Hospitals owned by private equity firms rake in almost 30% more income than hospitals that aren’t, according to new research published this week in JAMA Internal Medicine.

Why it matters: Private equity is gobbling up more and more of the health care industry. Investors are buying up physicians’ practices, hospitals and the firms that negotiate prices with insurers.

Former D.C. Guard alleges Army Generals lied about Jan. 6 response

Members of the National Guard and Capitol police keep a small group of pro-Trump demonstrators away from the Capitol following the insurrection on Jan. 6. Photo: Spencer Platt/Getty Images

A former D.C. National Guard official has alleged that top Army generals "lied" to Congress in their testimony on the U.S. Capitol riot, Politico first reported Monday.

The big picture: Col. Earl Matthews, who was serving on Jan. 6, alleges in a memo that the official version on the military response is "worthy of the best Stalinist or North Korea propagandist" and that the Pentagon inspector general's November report on it features "myriad inaccuracies, false or misleading statements, or examples of faulty analysis."

Toyota to build $1.3 billion U.S. battery plant in North Carolina

The all-electric Toyota bZ4X, the company's first battery-electric vehicle, at the Los Angeles Auto Show in Los Angeles, California on Nov. 17. Photo: Frederic J. Brown/AFP via Getty Images

Toyota announced Monday it's investing $1.3 billion to construct an electric vehicle battery "megasite" near Greensboro, North Carolina, set to open in 2025.

Why it matters: Toyota's Prius hybrid won environmental plaudits when it launched in 1997, but it has since lost ground to electric vehicle world leader Tesla, per Axios' Joann Muller. This battery plant will be the first to produce automotive batteries for Toyota in North America.