HONG KONG— Morgan Stanley and JPMorgan Chase & Co. will compensate their Hong Kong-based employees for quarantine hotel expenses incurred in returning to the city from certain types of personal travel.

As some countries that previously maintained zero-tolerance policies for Covid-19 begin to open their borders, Hong Kong has kept some of the strictest controls in the world, requiring most inbound travelers to isolate for as long as 21 days in designated hotels. Financial companies have said the restrictions are making it difficult to recruit and retain employees in the city.