Thursday, November 18, 2010
At the opening of the London conference, "Hong Kong: China's Global Financial Centre", Hong Kong’s Secretary for Financial Services and the Treasury, Professor K C Chan, said that Hong Kong has a unique role in helping UK-based financial services businesses grow in China and the rest of Asia.
Professor Chan remarked: "Why Hong Kong? Because Hong Kong is to Asia and China what London is to Europe. Like London, we have a high standard of regulation. Like London, we have a free and open economy. Like London, we have the infrastructure and professional talent to support our financial services. Add to that our relationship with China and proximity to the rest of Asia and you can see why I believe so strongly in Hong Kong's potential as an international financial centre."
“Hong Kong has often been described as a gateway to China. That is certainly correct if you think of the movement of goods, people and even capital – as Hong Kong is the largest foreign direct investment provider to China.”
“About 51% of China’s direct investment is originated from Hong Kong, reaching USD46.1bn in 2009. About 63% of China's overseas direct investment is also conducted through Hong Kong, reaching USD35.6bn in 2009.”
He also asked the delegates at the conference to consider the history of the listing of Chinese companies' shares in the Hong Kong market. He said that the China’s Central government “appreciates that having a Hong Kong listing would bestow investors' confidence on these mainland companies. The established market discipline in Hong Kong brings them international best practice standards in corporate governance, accounting, disclosure and management.”
“Hong Kong listing also gives them attractive valuations and access to a deep international liquidity pool,” he continued. “As of end-September 2010, 556 Mainland enterprises were listed in Hong Kong, raising a total of USD351bn.”
He pointed out that, last year, “Hong Kong ranked number one in the world for IPO funds raised. Total funds raised in Hong Kong through IPOs exceeded USD31bn in 2009. IPO funds raised this year will be even higher than in 2009.”
He said that Hong Kong is a testing ground for new ideas in the opening of China's financial market. For example, “Hong Kong's offshore renminbi (RMB) market is still at its infancy stage. The size of the RMB market in Hong Kong is 1/500 of onshore RMB deposits, but this only goes to show the potential our offshore RMB business has installed for us.”
"A new phase of market reform in China is the internationalization of the renminbi and the gradual opening-up of the capital account," Professor Chan confirmed. "There is no better place than Hong Kong to become the offshore renminbi centre."
Also speaking at the conference was the chief executive officer of Hong Kong’s Securities and Futures Commission, Martin Wheatley, who outlined in his speech how the continued development of the Hong Kong's regulatory regime has shielded it from the global financial crisis.
He said: "Hong Kong's robust financial regulatory regime augments our attraction as an international financial centre. We are committed to continuing a balanced regulatory approach, maintaining transparency, strengthening investor protection, and keeping abreast of international standards."
The conference itself also focused, in particular, on the development of Hong Kong as Asia's asset management hub. Hong Kong has witnessed 45% year-on-year growth of assets under management to over USD1 trillion in 2009 and, it was said, continues to attract new asset managers to the region.
The deputy chief executive of the Hong Kong Monetary Authority, Eddie Yue, commented: "We are already seeing more and more asset managers looking to set up their regional headquarters in Hong Kong to capture the investment and business opportunities in Asia, particularly in Hong Kong and Mainland China. I believe what we are seeing today is only the beginning of a period of exceptional growth in our financial services industry."