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Hong Kong is determined to maintain its position as the international financial centre of Asia and the key source of foreign capital for China, the Chief Executive, Mr Tung Chee Hwa, said in his policy address today (Wednesday).

He said in the past years the financial services sector had contributed substantially to our economy and would play an important part in our future.

"The current pressures in the Asian region may cause some economies to become more inward-looking, but Hong Kong will retain its free and open financial services structure.

"Furthermore, as China's economy develops and her need for foreign capital increases, Hong Kong's position as a major market for raising capital will become stronger," he said.

However, Mr Tung said we must now take a strategic view of what needs to be done to ensure that our financial market could support this expansion of our role.

He said: "We will study, for instance, how best to use information technology to facilitate fully automated and seamless transactions in the market. We will provide the necessary regulatory framework to protect the integrity of the market.

"Recent experience has shown us how important it is to co-ordinate more effectively surveillance and regulation across all sectors of the financial services market. I have asked the Secretary for Financial Services to take a more active role in co-ordinating regulators and market operators."

Mr Tung said a robust market structure needed the support of a workforce with the ability to adapt to the challenges and opportunities ahead.

He looked forward to receiving recommendations from the Steering Committee on the Feasibility Study on the Financial Services Institute, which was currently examining human resources demand in this sector with a view to meeting tomorrow's needs for top-quality personnel.

The Steering Committee was due to submit its recommendations in mid-1999.

Mr Tung said the Government would also press ahead with the development of new services:

* it would study proposals for a Venture Board for smaller and emerging technology companies' stocks.

* to strengthen our role as an international financial centre, we would also continue to develop the debt market.

The expansion of the Mortgage Corporation's business and portfolio and the introduction of the Mandatory Provident Fund Schemes would add impetus to this development.

Given sustained expansion and hence demand for capital on the Mainland, as well as the recovery of our economy, Mr Tung said he expected the overall size of our stock market to increase as the current global financial uncertainties receded.

"I firmly believe that we will in the future strengthen our position as Asia's leading international centre for financial services," he said.

End/Wednesday, October 7, 1998

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