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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.

1 hour ago - Health

U.S. ahead of pace on vaccines

A health care worker administers a dose of the Moderna vaccine in Ruleville, Mississippi. Photo: Rory Doyle/Bloomberg via Getty Images

The U.S. is now vaccinating an average of 2 million people a day, up from 1.3 million in early February.

Why it matters: That puts us on track to hit President Biden's goal of 100 million doses a month ahead of schedule.

Updated 3 hours ago - Politics & Policy

Harris breaks tie as Senate proceeds with lengthy debate on COVID relief bill

Photo: Oliver Contreras/Bloomberg via Getty Images

The Senate on Thursday voted 51-50 — with Vice President Kamala Harris breaking the tie — to proceed to debate on President Biden's $1.9 trillion coronavirus rescue package, likely setting up a final vote this weekend.

The state of play: Sen. Ron Johnson (R-Wis.) is forcing the Senate clerk to read the entire 628-page bill on the floor, a procedural move that will likely add 10 hours to the 20 hours already allotted for debate.