Transcript Chinese State Council`s decision

Hong Kong and Shanghai as
IFC 2020
Lions Club of Metropolitan Hong Kong Luncheon Meeting
Julia Leung
Under Secretary for Financial Services and the Treasury
24 September 2009
1
Chinese State Council’s decision
• State Council announced on 25 March
2009 a decision to speed up Shanghai as
an IFC by 2020 in tandem with the
national economic strength and
international status of RMB
• “到2020年，將上海基本建成與中國經濟實
力和人民幣國際地位相適應的國際金融中
心”
2
Chinese State Council’s
decision …cont’d
• National Development and Reform
Commission also released the Pearl River
Delta Reform Development Plan
“ 珠三角地區改革發展規劃綱要2008-2020”
• Improved ties between Mainland and
Taiwan
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Challenges and Opportunities
Challenges
• Marginalisation of HK as IFC
• Policy bias that favours Shanghai
Opportunities
• More relaxation means more businesses
for all
IS IT A ZERO SUM GAME?
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Indicators of Hong Kong as an International
Financial Centre
UK
USA
Japan
HK
Singapore
Mainland
China
Bank assets as a % of
GNP/GDP
5.4 times
96%
1.6 times
6.4 times
6.6 times
2 times
Market capitalisation of
stocks as % of
GNP/GDP
60%
71%
54%
6 times
1.3 times
56%
90.6(2)
100(1)
32.7(3)
13.2(6)
9.9(9)
n.a.
781
768
611
684
687
538
1
2
15
4
3
35
Intensity of financial
activities with 100 as
the base in the
USA(Ranking)
Global Financial Centre
Index (Competitiveness)
Rating and Ranking
5
Hong Kong’s Strengths as an International
Financial Centre
Sound Supervision and Risk
Management System
Fair Business Environment
characterised by the Common
Law System and an
Independent Judiciary
Open Market with High
Level of Foreign
Investment and Free Flow
of Capital
Hong Kong
Rich Pool of
Professionals
The World’s
Freest Economy
Having the Mainland as
our Hinterland
Commercial
Infrastructure
Language
and Culture;
匯聚大量專業人士
Quality of Life
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Hong Kong as China’s IFC

China has a unique advantage, having two financial centres to
support its rising economic strength

HK plays strategic role as laboratory for Mainland’s pilots on
capital account liberalisation and RMB internationalisation
- raising funds for Mainland enterprises
- managing Mainland’s growing private and institutional wealth
(QDII funds)

HK and Shanghai to complement each other in development as
IFC

Increasing financial integration with Pearl River Delta Region
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Hong Kong – Equity Fund Raising Centre

The world’s 7th and Asia’s 3rd largest stock market in
terms of market capitalisation.

As at end July 2009, the total equity funds raised through
initial public offerings so far this year was about HK$27.5
billion, ranking 2nd in the world.

During 2003 to 2008, a total of 405 enterprises raised
HK$1014.2bn in IPO in HK, the amount being the 6th
largest globally. Of these enterprises, 26.7%(108) were
Mainland enterprises, accounting for 68.3% of the total
equity funds raised.

Mainland stocks account for 55% of HK exchange’s market
capitalization with three of the world’s largest stocks listed.
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Hong Kong – A Leading Asset
Management Centre
 Combined fund management business amounted to
US$1,235 billion (HK$9,631 billion) in 2007,
representing a growth of 56.5% compared with 2006.
Over 68% of the combined fund management
business in Hong Kong is sourced from overseas
 The turnover of exchange-traded funds for 2008 hit
a record high of HK$1,800 million, showing a 176%
increase from that of the previous year, highest in
Asia
 Asia’s largest concentration of hedge funds, (245),
managing USD22bn in assets.
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Hong Kong as RMB Settlement Centre
 Narrow banking since 2004 (deposittaking, conversion, remittances and
card business)
 RMB bond issuance since July 2007
(mainland banks and subsidiaries of
HK banks)
 RMB trade settlement since July
2009
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