**************************************************
Following is the speech by the Financial Secretary, Mr Henry Tang, at the South China Morning Post Fund Manager of the Year Awards 2003 this evening (February 19):
Distinguished guests, ladies and gentlemen,
Thank you very much for inviting me here this evening to join this important event for the fund management industry. The awards give well-deserved recognition to those who did great work for their clients in the past year, and showcase the professionalism in the industry.
I imagine it takes a real expert to pick the fund managers whose performance reflects skill rather than luck during a year of tremendous growth and volatility. Despite SARS and the economic slowdown in the earlier half of 2003, Hong Kong's economy has experienced a sharp V-shaped recovery in the latter half of the year. The Hang Seng Index is up some 35% compared with end 2002. Indices in the neighboring Asian countries have recorded equally impressive growth. I have been told fund managers are able to smell what lies ahead of the market, I hope your scents tell you that this year will be a year of growth.
I notice that the growth is not just size, but also diversity. There has been a flurry of new investment products - index funds, guaranteed funds, retail hedge funds, real estate investment trusts ("REITs") and index tracking exchange-related funds ("ETFs") etc. They cater for different needs, including many first time retail investors, who place part of their savings into funds. In response to market needs, the Securities and Futures Commission has made steady progress in facilitating this broadening of the choice of investment products for the retail public in Hong Kong and has issued codes and guidelines concerning the regulation of these specialized investment funds.
The Government is naturally keen to continue to encourage the growth of the fund management industry in Hong Kong. In the Policy Address this year, the Chief Executive emphasized the importance of our developing into a world-class Asset Management Centre in Asia.
In fact, Hong Kong has already come a long way as a major regional fund management centre. Hong Kong captures a substantial part of internationally invested private wealth and is one of the most important private banking centers in Asia. We have a very high concentration of fund management companies - the number of companies that provide fund management or advisory services increased by 12% from 2001 to 2002, and a fifth of these have made Hong Kong their regional headquarters or offices. The number of authorised unit trusts and mutual funds reached 1,862 by the end of 2003.
Hong Kong's advantage as a fund management centre lies not only in our superior market infrastructure and unique institutional strengths. There is also one other very important factor, which deserves to be underlined, and that is our proximity to rising wealth. With close to US$400 billion in foreign reserves, and savings deposits of US$1.2 trillion, the Mainland is potentially one of the largest investors in the region.
With a wealth of fund management expertise, Hong Kong is well positioned to capture the huge business opportunities offered by the growing Mainland market. Good progress is being made in implementing the Closer Economic Partnership Arrangement (CEPA) with the Mainland. CEPA has improved the access of our professionals into the Mainland, including simplifying the procedures for Hong Kong professionals to attain Mainland qualifications in the securities sector. I have just returned from attending a High Level Conference on professional services in Beijing. The Government will continue its efforts to improve the environment for our professionals to conduct their business, and I welcome suggestions from you in this regard.
I am keenly aware that the achievements of our fund management industry are driven by the market. The Government is determined to continue our role as a facilitator. We are taking a multi-pronged approach to encourage the development of our bond market. To bring Hong Kong in line with other major international financial centres, we are working on an amendment to the Inland Revenue Ordinance to provide clear exemption from profits tax to offshore funds. The introduction of the Capital Investment Entrance Scheme is also going to benefit the fund management industry.
Ladies and gentlemen, while we in Government will continue to do our part, we need the industry to help us identify other measures which can enhance our competitiveness and position Hong Kong as a world-class asset management centre in the region. I look forward to working with you on this.
Once again thank you for inviting me to be here this evening. And may I also extend my sincere thanks to the South China Morning Post and Standard & Poor's for organising this prestigious event. By doing so they have helped to promote the fund management industry in Hong Kong, Asia's premier international financial centre. My heartiest congratulations to all those fund managers who find themselves on the winner's podium this evening. Thank you.
End/Thursday, February 19, 2004
NNNN
