Asia Financial Forum -day 2

On day 2 of the AFF (January 19, 2021), The Financial Secretary, Mr Paul Chan, delivered a video speech.

He spoke of the hope and the expectations he had for Hong Kong. “As an open economy, Hong Kong is hardly immune to the pandemic and other global, and local, forces. And the economic ride will continue to be rough going through the first half of the year. That said, I am hopeful that recovery will begin to find root in the latter half of the year. That, of course, is predicated on vaccinations providing the global economic booster we all need.”

He was optimistic about the future for Hong Kong saying” It’s built on our distinctive advantages under the “one country, two systems” arrangement. I’m talking about Hong Kong’s world-class financial system and the professional services prowess that supports it. To that, add the free flow of information, talent, capital and goods, in and out of Hong Kong. No less vital, is our long-standing rule of law and level playing field tied to our transparent and internationally aligned regulatory system, low and simple tax regime and deep market liquidity. Put it all together, and you know why Hong Kong means business. Whatever business you’re in, whatever investment interests you may have.”

He concluded with saying that “Hong Kong is committed to becoming the region’s green and sustainable finance hub. Our Green and Sustainable Finance Strategic Plan, launched last month, sets out our vision in this regard.” He mentioned the progress of the Green Bond Grant Scheme which launched in 2018 and the Government green bond issuance in 2019. He also stated that it had been planned from 2020 to issue green bonds totalling approximately US$8.5 billion by the end of this year (2021).

He concluded with “ We are, in short, planning for the long haul. For a green and sustainable economy that begins in Hong Kong and, through our business and financial expertise and leadership, embraces the entire Greater Bay Area. I invite you to join us in building the future. And finding yours – right here in Hong Kong. We are ready to help you achieve breakthroughs in fund-raising, investment, and tapping opportunities in China, Asia and globally.”

He continued “Hong Kong is the business and investment bridge between China and the rest of the world. We are the premier listing platform of choice for international and Mainland companies, and we continue to build on that unrivalled advantage.Since April 2018, innovative companies with a weighted voting rights structure, pre-revenue or pre-profit biotech companies and qualifying companies seeking a secondary listing have been allowed to list on our stock exchange.We are now the world’s second-largest fundraising venue for biotech companies. And, over the past 12 years, Hong Kong has led the world seven times in total funds raised through IPOs.”

He also talked about the strong connections for capital markets between Hong Kong and the Mainland and explained that Stock Connect “allows international investors to trade securities in Mainland markets through Hong Kong, while enabling Mainland investors to trade securities in Hong Kong through the Mainland’s domestic platforms.”

He advised that companies with corporate weighted voting rights structures listed in certain qualifying exchanges before October 2020 can now apply for secondary listings in Hong Kong, subject to relevant investor protection safeguards.Mr Chan talked about the introduction of the open-ended fund company and limited partnership fund regimes in 2018 and 2020, respectively. These would boost Hong Kong’s status as “Asia’s premier fund hub.”

The Financial Secretary also touched on tax concessions to encourage more overseas funds to set up in Hong Kong and the partnership between HKEX and MSCI (to launch equity index futures) reinforcing Hong Kong’s position as a premier risk management centre of choice and commitment to strengthening Hong Kong’s position as an international financial centre.

He went on to talk about Hong Kong being the gateway to the Guangdong-Hong Kong-Macao Greater Bay Area and the opportunities arising from that region in Mainland China. The development integrates Hong Kong, Macao and nine cities in Guangdong Province and he advised how it” is primed to reward our financial services sector in many ways- Including the Wealth Management Connect scheme.” This scheme will allow Greater Bay Area residents, comprising 72 million consumers, to carry out cross-boundary investment in wealth-management products distributed by the region’s banks. ”The upsurge in cross-boundary funds will consolidate Hong Kong’s position as the premier global hub for the offshore Renminbi business,” he surmised.

He also talked about Innovation and technology being a policy priority of the Hong Kong SAR Government. “ Its development and application is critical to every sector and industry of our economy, financial services very much included,” he said. He went on to provide examples of being a regional leader with smart banking which has been widely accepted by business and consumers:

among the very first markets in Asia to establish virtual banks with eight banks being issued licences
four virtual insurers being able to operate in Hong Kong
a virtual asset trading platform also being authorised to operate*
the Faster Payment System, a round-the-clock, real-time platform for banks and e-wallet operators – it has recorded more than 6 million registrations, counting an accumulated transaction volume of over US$240 billion since launching in 2018

*he also noted that a licensing regime to regulate virtual asset trading platforms for market development and better investor protection was in the process of being instituted.

Paul Chan then moved to the insurance sector where he advised “We are working on a number of measures to enhance our competitiveness as a premier insurance hub. A group-wide supervision framework is being developed for the supervision of insurance groups which have their holding company incorporated in Hong Kong. We will also implement a risk-based capital regime to replace the existing rule-based one, and will establish a Policy Holders’ Protection Scheme for policy holders in the event of insurer insolvency. At present, Hong Kong’s Insurance Authority is the group supervisor of three international insurance groups, namely AIA, Prudential and FWD. This has clearly demonstrated Hong Kong’s advantages as an international financial centre and insurance hub.”