Secretary for Financial Services and the Treasury Visits Washington, D.C.
Secretary for Financial Services and the Treasury, Professor K.C. Chan, meets with U.S. Federal Reserve System Chairman, Ben Bernanke
Spectacular economic growth on the Mainland of China meant considerable business opportunities for Hong Kong, the Secretary for Financial Services and the Treasury Professor K.C. Chan said, concluding a two-day visit to Washington, D.C.
Addressing a luncheon at the Carnegie Endowment for International Peace on May 14, Prof. Chan said the Mainland of China's remarkable growth resulted in quick and massive accumulation of wealth, which translated into huge demand for sophisticated financial products not yet available in the country. At the same time, Mainland enterprises were scouring for funds to grow their businesses.
Prof. Chan remarked that Hong Kong had become the darling of Mainland enterprises wishing to list in another jurisdiction as the city was a trusted relative to manage Mainland money. "Since 1993, when the first Mainland company was listed on our stock exchange, more than 440 Mainland enterprises have done so, raising a total of more than US$240 billion," he said.
Mainland authorities have progressively allowed the country's banks, securities and fund management companies and insurance companies to invest overseas through the Qualified Domestic Institutional Investors, or QDII.
Hong Kong was likely to be the principal beneficiary of QDII because it was a market Mainlanders knew well culturally and financially.
Prof. Chan said that when Mainland authorities wanted to utilize untested means of financial transactions, Hong Kong was the favored outlet giving the city an enormous advantage.
Illustrating Hong Kong's attractiveness, Prof. Chan noted that the city was third worldwide behind London and New York in terms of financial center competitiveness as ranked by the City of London in its March 2008 "Global Financial Centres" index.
He stated that Hong Kong's savvy financial professionals possessed intimate knowledge of the Mainland market which helped investors, particularly overseas investors, avoid costly mistakes.
"Fund managers can leverage on Hong Kong's strengths to tap the huge domestic savings of China. We are already Asia's leading wealth management center with 80 fund management houses currently operating in Hong Kong "
Investors could capitalize on the Mainland of China's economic growth by investing in Chinese enterprise shares listed on the Hong Kong Stock Exchange.
Prof. Chan also noted that the city was increasingly attractive due to the steady growth of Renminbi business. Hong Kong is the first place outside the Mainland of China with a Renminbi bond market.
In strengthening financial cooperation with the Mainland economy, Prof. Chan said Hong Kong was developing a complementary and interactive relationship with the Mainland financial system by the following measures:
* Encouraging Hong Kong financial institutions to expand their presence on the Mainland of China;
* Encouraging Mainland funds, investors and financial institutions to go overseas through Hong Kong;
* Strengthening the links between the financial markets in Hong Kong and the Mainland of China;
* Getting Hong Kong financial instruments to be traded on the Mainland of China; and
* Continuing to expand the Renminbi business in Hong Kong.
Prof. Chan said Hong Kong would continue to review its regulatory model to ensure that it would not hamper financial innovation or stifle further development of Hong Kong's financial services sector.
He reported that the Securities and Futures Commission announced a set of initiatives to streamline the licensing procedures for overseas fund managers wishing to operate in Hong Kong.
While in Washington, Prof. Chan called on Ben Bernanke, Chairman of the Federal Reserve System; Christopher Cox, Chairman of the Securities and Exchange Commission; and David McCormick, Under Secretary of the Treasury for International Affairs.
Professor K.C. Chan's speech at the Carnegie Endowment for International Peace: http://www.hketowashington.gov.hk/dc/speeches/speeches08/051408.htm
Financial Services and the Treasury Bureau: http://www.fstb.gov.hk/
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