Hong Kong’s positioning and prospect as a world monetary centre

[ad_1]

Distinguished visitors and associates in Beijing, Hong Kong and abroad:

Good afternoon, and a really heat welcome to you all. 

I start with heartfelt because of Governor Yi, not just for his inspiring opening remarks, but in addition for the unfailing help the PBoC has given to Hong Kong over a few years. My colleagues and I additionally prolong our gratitude to worldwide establishments such because the BIS and the IMF to your shut partnership via all these years.  With out your help, Hong Kong’s monetary sector could be in a far much less sturdy place than it’s as we speak. 

In somewhat over six months we shall be celebrating the twenty fifth anniversary of Hong Kong’s institution as a Particular Administrative Area.  It is a good second to pause – each to replicate on Hong Kong’s success as a world monetary centre, and to think about the steps we have to take to construct on that success.

Tackling such an unlimited topic in ten minutes is a tall order. Let me make an try by asking two easy questions. What are the attributes of an IFC?  And, how far does Hong Kong possess them?  I wouldn’t have all of the solutions. However I’ll strategy these questions with three phrases: ecosystem, resilience, and alternative.

Ecosystem

Let me begin with the ecosystem.  By this, I imply the assorted elements, mechanisms, and interactions throughout the monetary system. However I additionally check with the bigger setting wherein the monetary system operates. These two domains are intricately linked with one another. And not using a beneficial working setting an IFC can not flourish.

Hong Kong’s monetary providers are actually broadly based mostly and nicely established, reinforcing our standing as a worldwide centre on many fronts. We’re additionally championing rising developments that form the way forward for finance – notably fintech and inexperienced finance.

All of this outcomes from the onerous work of our monetary practitioners, supported by world-class skilled providers in fields starting from accounting to threat administration and compliance.

Hong Kong has a completely bilingual authorized system, rooted within the frequent regulation, with an unbiased judiciary and a powerful authorized career. Our monetary regulatory regime is internationally recognised for its open and progressive strategy. These are tried and examined parts of a rules-based system that gives a degree enjoying subject for market contributors from all around the world.

Our world-class universities proceed to supply excellent professionals who’re extremely aggressive by any customary.  Hong Kong can also be a magnet for proficient individuals from all corners of the world. They’re attracted not simply by work alternatives but in addition by our cosmopolitan way of life, by our thriving cultural – and culinary – scene, and by the spectacular nation trails and nice seashores which might be so near the bustle of metropolis life.

Crowning all of that is Hong Kong’s geographical and historic position because the gateway that connects China and the remainder of the world, and the big alternatives that this brings.  That is, I feel, the defining function that firmly positions Hong Kong because the main IFC within the Asia time zone.

Resilience

Resilience is the bedrock of an IFC.  Previously quarter-century, Hong Kong has been uncovered to a sequence of crises which have severely examined our monetary system – the Asian monetary disaster, SARS, the worldwide monetary disaster, and extra just lately the triple whammy of social unrest, geopolitical tensions, and COVID-19 pandemic. 

By all of those crises our monetary system has emerged stronger.  

Take the financial system.  The Linked Trade Charge system has remained rock strong all through these testing instances.   Certainly, market confidence within the system has solely strengthened over time.  On the peak of the triple whammy that I simply talked about, we noticed continued inflows into the Hong Kong greenback, pushing our alternate charge to the sturdy facet of the conversion zone.  Speculators betting towards the Hong Kong greenback discovered a tough lesson.

Our banking system is sound and protected, regardless of a difficult working setting: capital and liquidity ranges stay nicely above international requirements; mortgage high quality and profitability examine favourably with international friends. 

We don’t take this as a right.  We’re keenly conscious that Hong Kong as an IFC performs an outsized position not solely in supporting the native economic system, but in addition in underpinning commerce and funding actions throughout the area.  Our banking property are 9 instances our GDP; the fairness market 16 instances; and property beneath administration 13 instances.  Hong Kong is the most important US greenback funding centre in Asia, and is second on the planet solely to London and New York.  

In a extremely interconnected international monetary system, the place a lot relies on the steadiness of IFCs, we try to be a accountable stakeholder.  We search to realize this –

  • by setting up mechanisms to carefully monitor market developments and behaviours;
  • by regularly enhancing our regulatory regimes to mitigate dangers within the monetary system;
  • by constructing buffers and planning for contingencies on sunny days, and by swiftly implementing contingency plans when storm clouds strategy; and
  • by contributing to coverage deliberation and customary setting at worldwide regulatory boards. 

We additionally construct resilience by enabling market contributors to grab new alternatives to deepen and broaden Hong Kong’s position as an IFC. This brings me to my third phrase: alternative.

Alternative

For a lot of a long time Hong Kong has been intermediating the commerce, funding, and monetary flows between China and the world.  Immediately over 60 per cent of international direct funding into the Mainland is routed via Hong Kong. An analogous determine applies to China’s outward investments. 

Hong Kong is the pre-eminent fund-raising venue for Mainland corporates, via fairness IPOs, debt issuance, financial institution lending, and varied types of non-public funding. 

In recent times, two main developments in monetary linkage have been gaining momentum.  One is the continual opening of the Mainland’s monetary markets to international buyers via the assorted northbound Join schemes with Hong Kong.  The opposite is the growing southbound visitors, once more via the Join schemes, that allows Mainland buyers to put money into abroad monetary property. 

These are vital developments.  They exhibit China’s confidence and willingness to be linked to the worldwide monetary markets.  The southbound schemes additionally ship a transparent message: as China’s economic system grows and its individuals turn out to be extra prosperous, each institutional and retail buyers search for extra diversified allocation to abroad property. 

Let me provide some context right here.  Once we take into consideration the northbound visitors, we must always keep in mind that, in international phrases, China’s inventory and bond markets are second in measurement solely to their US counterparts.  For the southbound visitors, we’re speaking about managing the wealth of the world’s second largest economic system and most populous nation.  And we’re solely within the early phases of those two-way flows via the Join schemes. 

Hong Kong is the pure selection of venue to host the Join schemes.  Fairly aside from our glorious ecosystem and confirmed resilience, now we have a powerful document because the Mainland’s trusted associate in its entry into the worldwide monetary system. We’ve been capable of help in reaching the specified outcomes whereas making certain the integrity and stability of the Mainland’s personal monetary system.

Equally, Hong Kong is a trusted associate for worldwide buyers.  We provide them entry to Mainland markets within the language and guidelines with which they’re acquainted. In doing so we assist maximize their alternatives whereas minimising their compliance prices and dangers.

One thrilling facet of the Join schemes is the prospect of unleashing the potential of Hong Kong because the world’s main offshore renminbi enterprise hub.  The internationalization of the renminbi and the opening of China’s capital account are interdependent points.  Immediately’s seminar will deal with Hong Kong’s position in driving offshore RMB enterprise, and the alternatives that include it.  I might merely wish to stress the purpose that Hong Kong has the infrastructure, the experience, and the markets to carry out that position. 

Earlier than I conclude, let me point out two different alternatives Hong Kong can not afford to overlook: inexperienced finance and know-how.  We intend to be on the forefront of those two developments that can outline the way forward for finance.

We’re becoming a member of fingers with native and worldwide monetary regulators to make sure that the monetary sector performs its half in reaching international net-zero goals.  We’re working with the banks to handle their very own local weather threat as they assist the actual sector go inexperienced.  Particularly, in growing our monetary ecosystem, we’re serving to the monetary sector fill the capability hole in data, expertise and knowledge.  We’re additionally taking steps to create a extra supportive platform to allow inexperienced and sustainable finance to take off, not simply in Hong Kong but in addition on the Mainland and within the area as an entire. 

When it comes to know-how, now we have laid strong foundations which have already made digital banking and quicker funds part of each day life.  We are actually accelerating the digital transformation by encouraging all banks to harness the ability of knowledge to advertise monetary effectivity and inclusion. We’re pioneering analysis and pilot schemes in home and cross-border central-bank digital currencies.  We’re more than happy that the PBoC is our shut associate within the m-CBDC Bridge mission and the technical trials for cross-boundary use of e-CNY. 

Conclusion

There may be rather more to say about these thrilling matters, and I’ve little doubt that rather more shall be stated throughout this afternoon’s seminar.  I started with the query of whether or not Hong Kong has the attributes of an IFC.  My reply is a transparent and resounding “sure”.  Sure, due to what now we have achieved collectively via constructing our ecosystem and our resilience; and sure, due to what’s achievable in future via the various alternatives that lie forward.

I now sit up for what guarantees to be a really attention-grabbing and productive afternoon. 

Thanks.

[ad_2]

Supply hyperlink

Share / Save

Learn More About Our Alternative Investments: 213-460-5586

Leave a Reply

Your email address will not be published.

Categories