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SFST's speech at Forum on Management of Insurance Funds


Following is the speech (translation) by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, at the Forum on Management of Insurance Funds in Beijing today (November 26):

Hong Kong as the Best Investment Platform for the Mainland


Ladies and gentlemen,

Good morning. First of all, I would like to welcome all of you to this forum, and express my sincere gratitude for your strenuous support for this event.

The purpose of this forum is to provide an excellent opportunity for market practitioners in various areas in the financial services sector from Hong Kong to share their experience and insights with the Mainland insurance industry on the management of funds. Since Hong Kong and the Mainland are closely connected, we are very pleased to contribute to the economic as well as other areas of development in the Mainland. As a matter of fact, since Hong Kong and the Mainland possess many different edges, both economies would become stronger and would achieve a win-win situation through close cooperation.

As a renowned international financial centre, Hong Kong possesses a superb financial infrastructure, modern financial facilities and a regulatory regime which is in line with international standards. That said, what is even more important is our pool of local and overseas financial services talent who possess ample knowledge, experience and exposure in the international market. Coupled with their rich experience in servicing Mainland enterprises, our professionals are well-qualified to provide professional advice to the Mainland insurance industry on asset management, including risk management and diversification of investment. Hong Kong is one of the most prominent asset management centres in Asia. In 2003, the total assets in the fund management business in Hong Kong amounted to HK$2,947 billion, of which HK$1,860 billion originated from overseas investors, accounting for 63% of the total assets. The assets managed in Hong Kong amounted to HK$1,194 billion.

In addition to providing quality professional advice and services to the Mainland insurance industry on asset management, Hong Kong's well-developed and liquid financial market could also serve as a desirable investment platform for the Mainland insurance industry. Hong Kong's stock market is the eighth largest in the world, and the second largest in Asia, with a total market capitalisation of over HK$6,300 billion (renminbi 6,700 billion). Our stock exchange has also overtaken London, Europe and Japan to become the second largest fund-raiser worldwide in the first nine months of this year. Hong Kong is also the world's 12th and Asia's third largest banking centre. Over 70 of the world's top 100 banks have set up offices in Hong Kong. In terms of foreign exchange turnover, Hong Kong ranks 6th in the world.

Hong Kong's financial market provides a lot of products of high quality and liquidity, including securities, derivatives, warrants, bonds, unit trusts/mutual funds, securities funds, bond funds, index funds, guaranteed funds, hedge funds, currency funds, equity linked instruments and exchange traded funds. This array of products enable investors to choose the best investment portfolio on the basis of their preference with regard to risk and returns. At present, there are over 1,000 companies listed in Hong Kong, and some 1, 872 unit trusts and mutual funds authorised by the Securities and Futures Commission. As at end September 2004, the outstanding amount of Hong Kong dollar bonds was about HK$595.6 billion (renminbi 632 billion). More importantly, the Mainland insurance industry can use Hong Kong as their base for undertaking global investment to enhance investment returns and diversify risks, utilising our well-developed financial system, modern financial infrastructure and pool of professional talent.

There has been encouraging progress in the development of our bond market over the past year, with the policy support of the Hong Kong Special Administrative Region (HKSAR) Government and the concerted efforts of the industry. To promote the market development, we have implemented a series of measures, including tax incentives and streamlining of procedures. Besides, the HKSAR Government has also set a good example by issuing the $6 billion securitisation bonds and the $20 billion global bond offering earlier this year. The latter one was the largest dual currency and multi-tranche offering from the region, available to both retail and institutional investors at the time. This success demonstrates that Hong Kong possesses the necessary expertise and infrastructure for launching sizeable bond programmes.

The Government of the HKSAR has been making continuous efforts to develop our market and to cater for the financial development needs of our country. We will continue our efforts in maintaining Hong Kong as the best investment platform for the Mainland. These include:

First, we will continue to ensure our regulatory framework is effective, transparent and in line with international standards to uphold the quality of our financial market and maintain investor confidence.

Second, we will continue to enhance the standard of corporate governance and perform the gate-keeping role effectively in order to strengthen investor confidence. Mr Huang Ju, Vice Premier of the State Council, has earlier stated that the listing of Mainland enterprises in Hong Kong, which is an international financial centre, not only fostered the development and prosperity of Hong Kong's financial services industry, but also facilitated the reforms undertaken by Mainland enterprises themselves. The Government of the HKSAR will continue our work in this area.

Third, we will continue to update our legislation and rules to cater for the development of new products in the market. We will also continue to provide an effective financial infrastructure which is in line with international standards.

Fourth, we will strive to support the development of the Mainland financial market, and foster experience sharing between the two places. Our forum today is one of such good examples. This is a good start for establishing links between our financial and asset management experts and the Mainland insurance industry. It also provides an occasion for the Mainland insurance industry and Hong Kong's asset management and financial services industries to exchange experience and strategies on management and investment of insurance funds, as well as sharing views on future investment opportunities.

I hope the audience could seize this unique opportunity. I also wish the forum every success. Thank you.

Ends/Friday, November 26, 2004


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