“If the RMB depreciates, Southbound trading goes through the roof!”
A conversation overheard in Central
Ideas about the borderless world have been around since the advent of modern information communication technologies in the late-1980s. The internet, email, Skype and Google Street View have made the world a more tangible, seemingly smaller place. So, what’s the point of going on an expensive trip to a foreign country and doing fieldwork? Is this an outdated concept? While some might argue that it is, I would disagree. Location and social interaction matter. Depending on your research subject, these things can matter a lot; not only for ethnographers, also for other disciplines. While the benefits of more obvious aspects of fieldwork such as conducting interviews are well documented (and some would argue that you can also do them via Skype), I want to draw attention to another aspect of doing fieldwork – that is the benefits of actually “being in the field” by drawing on a recent research visit of mine to Hong Kong and what I gained from this.
What can we learn from the field?
I have never been an ethnographer, anthropologist or “interpretivist” scholar for whom this article might not offer any novel insights. For these scholars this article will describe some of their standard research practices in very basic terms. Rather, I’m a political economist working on finance, situated in the grey space between a politics department and a business school. My research project focuses on capital market development in China, their internationalisation and the role exchanges play in this process (that is stock, derivative or commodity exchanges, and even the ones with the trading floor), and I find a lot of the data for my work on Bloomberg or through reading the Financial Times. My research is quite empirical, on the one hand it is technical and data-driven, on the other side, it draws on interviews with market participants and their knowledge of and experiences in a changing market environment. One might describe my ontological position as that of a qualified neopositivist (Schatz 2006), So why would I need to conduct fieldwork?
Take a step back and think about your home town or country. Living in both Germany and the UK, I am always fascinated by the differences in the financial cultures between the two countries. For example, differences in how credit cards are used, how easy or difficult it is to get a mortgage, between ownership and renting. When I’m at a local market in England it’s very likely that I can pay contactless with my credit card or even smart phone while in Germany even larger shops might not accept cashless payments, mobile payments hardly exist and they might accept debit cards but not credit cards. Or how British friends of mine studied Spanish and History and became corporate lawyers or work in finance, something unthinkable in Germany with its rather strict education and training system. While these things might seem trivial, they can easily be related to larger academic debates on financialisation or varieties of capitalism which analyse the different ways capitalist systems are organised and which social ramifications this has – for which the UK and Germany are often the poster children. Similarly, in recent years, political economy research has developed the Everyday Political Economy approach, which draws upon how everyday actions such as the ones described above matter for and also drive and co-constitute the larger socio-economic structures we live in (see for instance I-PEEL). When moving from Germany to the UK for the first time, I got a much clearer and deeper understanding of these processes. When recently going on a research visit to Hong Kong, I realised that the same logic applies when conducting fieldwork.
Financial cultures & practices Hong Kong
Overall, I found being in Hong Kong for a prolonged time very rewarding for my research. Take the quote from above for instance. I was walking back to my office from an event I attended – a breakfast seminar on capital market development in Hong Kong organised by a Chamber of Commerce which was highly interesting by itself – and was waiting at the traffic lights. Suddenly, I realised the people waiting next to me (who seemed to work in finance) were talking about my research subject, highlighting the relationship between China’s monetary policy and investment flows from China to Hong Kong via the newly established Stock Connect scheme. A fascinating encounter, especially as it helped me further develop an idea I was working on the previous days on how excess liquidity in China that built up after the global financial crisis was linked to the push towards internationalising Chinese capital markets. My environment literally inspired me and facilitated my research process. Where else could I have encountered something like this?
Similarly, I went to a local bank in Hong Kong and noticed that there was a corner full of elderly citizens staring at a few screens. After seeing this a few times, I investigated the subject. It turns out that trading stocks is actually a kind of hobby for some people and that these trading corners can be found in many local communities – people meet in these corners, discuss the performance of stocks, buy and sell their shares. TVB Pearl and TVB Jade, two of the most watched TV channels in Hong Kong, host several shows for almost the entire duration of the stock market’s trading hours where experts talk about the performance and likely trend of various stocks or industries and where retail investors can call in real-time and get investment advice. And in contrast to Hong Kong, where retail investors represent only 30% of the market (as against to 5-10% in Europe), in China 90% of market activity is retail investment flows. Again, this ties back to the everyday and how this shapes larger structures.
During my stay in Hong Kong, also I attended several industry events such as the one mentioned above. While some of them might cost money, many of these are free and open to academics. At these conferences, workshops or seminars, I met dozens of interesting people working in the financial industry, and listened to talks on various aspects of my research subject. In a way, I learned what “the market” thought about current developments in China’s financial opening and liberalisation, the “Belt and Road Initiative”, Hong Kong Exchange’s new business plan and other contemporary issues relevant to my research. Attending these events, was very useful to test and further develop some ideas I had come up with during my previous research as my ideas where confronted with the views and insights of financial market participants. In addition, I received countless briefings, research papers or presentations which – while not containing sensitive or secret data – were full of important information and which are not usually publicly accessible. I would never have been able to get such insights when only working from my office in Warwick – or anywhere else outside of China for that matter.
It was also incredibly useful to talk to locals. Retail investors usually do not rely on fundamental analysis to evaluate stocks but more often on news or rumours. As CNBC reporter Eric Chemi noted, “The Chinese stock market […] operates so differently from U.S. and European markets. […] it is dominated by retail investors, who treat it very much like a casino.” (Chemi & Fahey 2016). Approaching the ‘Mom and Pop’ investors in a local bank branch or talking with people on the street about (rising) property prices and (them speculating in) stock markets was fascinating and helped illuminate how different these markets functioned. When contrasting this with conversations I had with Hong Kong-based fund managers, I really got a sense of how different investor base and market sentiment are from what we are used to in Europe or the US and why long-term international investors such as pension funds are hesitant to invest into China.
Similarly interesting was talking to academics based in Hong Kong whom I contacted and exchanged thoughts on some of these developments with. I had a very fruitful discussion for instance with a fellow PhD student based in Hong Kong who researches everyday financialisation, retail investors and the rise of investment advisors in Hong Kong: Did you know that there are hardly any pension schemes in Hong Kong? But because the government does not want to increase income tax (it is a tax haven after all), they promote financial solutions to these social issues – which of course has enormous social repercussions like rising income inequality, exploding property prices and hundreds of thousands of livelihoods solely dependent on volatile markets. Therefore, this talk really complemented my insights on the trading corners I found in banks and gave me a better understanding of overall processes of financialisation, how markets functioned, and which role regulation and the state have in these processes.
Even talking about my research over lunch or coffee with former colleagues or newly-made friends who worked in finance proved incredibly helpful as they contributed valuable feedback, corrections and additions or explained the specificities of the local capital markets. One evening I met someone working on a new commodity platform that is being set up in mainland China and I learned more about the differences between global and Chinese commodity markets, the importance of benchmarks and standards in commodity trading and how this platform aims to implement these in China. This does not mean that you necessarily need to know people in advance, you often meet at events such as the ones described above. Even going to a social event in your free time can prove surprisingly helpful in unexpected ways. I went for instance to a talk by the Asia Society where I spoke with another visitor. This person was previously the head of a global investment bank’s Asia business and was happy to share some of his insights with me. During another such social event I met someone, who works in finance and deals with retail investors, routing their orders into the market as a broker. Again highly interesting and adding to my understanding of above-mentioned financial advisors, Mom and Pop investors and trading corners.
Concluding remarks: knowledge production, exposure & immersion
After a few weeks, my understanding of how Chinese and Hong Kong financial markets worked, their specificities and similarities with “global” markets or important developments in these markets grew exponentially, and I leaned things that I could have hardly found out through desk research. Being in the field and being exposed to my research subject really increased my knowledge thereof. Because these things matter and can enable a much more holistic picture of a research topic by adding everyday life, culture, social norms and chance interactions into the mix. Of course, this is not proper “data” that I would directly incorporate into my work unchecked. Rather, it helps to place your research into a bigger picture and into context, to better understand it, and to identify potentially important stories and developments. And once you’ve identified these, it is relatively easy to conduct further research, verify and flesh out these stories as well as search for other data sources which can confirm and support these stories.
So, while I would usually not draw on such insights as the main sources of my research, being immersed into and exposed to my research subject actually really helped me to deepen my understanding and further develop my knowledge of a topic that seems rather technical at first. Nicholas Taleb highlights that many scientific discoveries that originated from exposure to opportunities than from design and planning (2009: xxv). In a similar vein, James Webb Young (1965) argued that in order to develop new ideas, our mind needs to be trained in the ability to see relationships between things we already know. A view that is also shared by Steven Johnson (2011) who argues that an idea is not a single moment of genius but rather a new configuration of neurons in your brain that have never fired in sync before. How do these new networks form? In his TED talk, Johnson tells the fascinating story of how GPS was developed by exposure to and connecting with other people. Companies such as Google or Apple have long used such insights to facilitate their business development.
Inspiration, innovation and creativity are highly important for the further development of scientific ideas and highly dependent on the environment the researcher is situated in. When researching Chinese capital market development in Hong Kong I certainly experienced this. I think it is important to get out there, become exposed, let your research undergo a reality check, refine existing ideas as well as develop new ones. That is why fieldwork matters.
Chemi, Eric & Mark Fahey (2016) “This China stock market is so different than we are used to”, CNBC, 8 January 2016.
Johnson, Steven (2010) Where good ideas come from: the natural history of innovation. Penguin, London.
Taleb, Nicholas (2009) The Black Swan: the impact of the highly improbable. Penguin, London.
Schatz, Edward (2006) “Ethnographic immersion and the study of politics”, in: Edward Schatz (ed.) Political ethnography: what immersion contributes to the study of power. University of Chicago Press, Chicago.
Young, James Webb (2003 ) A technique for producing ideas. McGraw Hill, New York.