Following is the speech by the Financial Secretary, Mr Antony Leung, at the SCMP Fund Manager of the Year 2002 Awards Presentation Ceremony this (February 20) evening (English only):
Distinguished guests, ladies and gentlemen,
Thank you very much for the invitation to attend this ceremony tonight. As you know, I'll be presenting my Budget Speech in less than two weeks, so you can imagine how full my diary is these days. But I just could not pass up the opportunity to pay tribute to some of the people whose work contributes to Hong Kong being such a dynamic financial hub.
I have no doubt that you'd love to hear a sneak preview of the Budget, but I'm afraid that would be too much like insider trading. So instead I'll talk about Hong Kong's crucial role as an international financial centre, and about the Government's determination to further develop and enhance that role. All I need to say at this juncture is that the Government is confident that we will balance the Budget by the year 2006-07.
It has been a year since we last gathered for this event. In the past year, thanks to our financial sector, Hong Kong has further cemented its position as Asia's world city. Including secondary offerings, 110 billion dollars was raised in the stock market - a 71% increase over the previous year. We had the successful listings of the Bank of China and China Telecom. In fact, 70 billion dollars was raised by H-shares and red chips through Hong Kong last year, and we are seeing more and more Mainland companies looking to list in Hong Kong. This clearly demonstrates our important equity-financing role in supporting the economic development of the Mainland.
We are committed to continuing the development of our financial sector. The Chief Executive promised in his Policy Address last month that the Government would keep strengthening Hong Kong's role as a major international financial centre and the premier fund-raising centre of China. Building on our legal system and the rule of law, we will upgrade our market structure and improve corporate governance. We will promote development of the bond market and fund-management businesses, and facilitate development of new financial products, especially derivatives. Let me highlight the latest developments in these areas.
The bond market is certainly one of our key foci. Given the current low interest rates, the bond market has been getting a lot of attention. Until recently the toddler of our financial services family, the Hong Kong dollar bond market has made significant progress. Products are now a lot more diverse, and retail interest is much stronger. Now we are removing impediments to growth through legislative and administrative measures. We are also encouraging public-sector bodies like the Hong Kong Mortgage Corporation, the Airport Authority, the KCRC and the MTRC to come to the market. This will deliver new and continuous liquidity, and provide private-sector issuers with a receptive environment to launch their own issues.
Meanwhile, we are implementing the necessary infrastructure to support bond market development. This includes direct links between our clearing organisations and those overseas, such as Euroclear. Just last month, in fact, a link went live between the Hong Kong Monetary Authority's Central Moneymarkets Unit and Clearstream Banking in Luxembourg. The HKMA has also reached agreement with the China Government Securities Depository Trust and Clearing to establish a link that will enable authorised Mainland financial institutions to hold and settle debt securities in Hong Kong.
Outside of Hong Kong, we are actively participating in regional bond market development initiatives. We are co-chairing with Korea and Thailand the Policy Initiative on 'Development of Securitisation and Credit Guarantee Markets' under the 9th APEC Finance Ministers' Process. Under another related initiative, the HKMA is now working closely with the Bank for International Settlements to hammer out details for an Asian Bond Fund. The proposal will provide central banks in the Asia-Pacific region with an opportunity to invest a portion of their reserves in Asian bonds. All these initiatives will help consolidate our position of leading bond market development in Asia.
Besides the bond market, we are pushing ahead a number of initiatives to foster the development of our fund management industry. The first is the proposed 'Regional Passport System for Hong Kong registered funds', which aims to allow selected funds registered in Hong Kong to be marketed in other jurisdictions in the region without having to re-register. We are now discussing a proposal with Australia. Later we will look to extend it elsewhere.
The second initiative is retail hedge funds. The Securities and Futures Commission approved the marketing and sale of hedge funds to retail investors last year, and so far five funds have been authorised. Of course, it will take time for investors to become familiar with these new products, but we look forward to their continued expansion.
The third initiative is Real Estate Investment Trusts. Securitisation of property investments increases market liquidity and reduces minimum size of entry. The SFC is currently developing the technical details, and we hope that such funds will provide a more diversified range of investment products.
I am sure that the financial services industry will continue to grasp each and every opportunity to bring a wide range of new and innovative investment choices to the market. Last year, the Hong Kong Exchanges and Clearing Limited introduced a variety of new products, such as Equity Linked Instruments as well as new types of Exchange Traded Funds and International Stock Futures and Options. Trading of the mini-versions of some traditional derivative products, such as mini-Hang Seng Index Futures and Options, has been on the rise. I look forward to strong momentum in this healthy growth trend. All these innovations will enhance our attractiveness as an investment and financial services centre for Asia.
Ladies and Gentlemen, your business is big business in Hong Kong, and you are doing your part to reinvigorate the economy. I would like to congratulate tonight's award winners. I also commend the South China Morning Post and Standard & Poor's for organising this event, which is so important for spreading the word in the community about the work of the fund industry. The Government will join hands with the industry to facilitate further development of the financial markets that help solidify Hong Kong's position as Asia's world city.
Thank you very much.
End/Thursday, February 20, 2003