Report by the Convenor of the Focus Group on Financial Services after the Economic Summit (English only)
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    Following is the report by the Convenor of the Focus Group on Financial Services, Dr David Li, at the press conference on Economic Summit on "China's 11th Five-Year Plan and the Development of Hong Kong" today (September 11):

Chief Executive, ladies and gentlemen, members of the press, good evening.

     The Focus Group on Financial Services discussed financial development strategy for Hong Kong in response to the 11th Five-Year Plan and associated challenges and opportunities with the aim of enhancing the status of Hong Kong as an international financial centre. Members of the group consider the relationship between the two financial systems of Hong Kong and the Mainland should be cooperative, complementary and interactive. Hong Kong's financial platform can help improve the efficiency of the financial intermediation and support sustainable economic growth on the Mainland. It will also help enhance Hong Kong as an international financial centre. We discussed a five-pronged financial development strategy and agreed that Hong Kong can help improve the efficiency of Mainland financial intermediation by strengthening Hong Kong services to both the international and domestic financial intermediation on the Mainland and provide a testing ground for the move towards renminbi convertibility for the capital account.

     The Hong Kong Monetary Authority would prepare a detailed proposal on how each of the five strategies should be best pursued, specifically, members of the focus group agreed to explore proposals for:

(1) further increasing the presence of Hong Kong financial institutions in the Mainland market;

(2) further facilitating funds, investors, fund-raisers and financial institutions on the Mainland to come out and link up with the global market;

(3) bringing financial instruments issued in Hong Kong to the Mainland; there is also a need to enhance supervisory cooperation between regulators of the two places and to look into issues such as dual-listing rules and cross-border price premiums;

(4) further expansion of renminbi business in Hong Kong, particularly in respect of trade settlement in renminbi and the issuance of renminbi bonds;

(5) and finally, strengthening cross-border linkage of payment systems and settlement and clearing systems for equity and bonds.

     The focus group believes that the Government should seek to work closely with the Mainland authority regarding the country's financial reform and reflect views on how Hong Kong can contribute to the country's financial reform and development as appropriate.

     The focus group has also proposed that apart from the Mainland market, Hong Kong should explore the business opportunities from other economies in our region.

     In addition, the focus group has also emphasised the Government's policy must be conducive to maintaining a strong pool of talent, both groomed locally or recruited globally to maintain Hong Kong's high standard of financial and related services.

     The focus group has agreed to set up three working groups, each headed by one of its members to study specific strategies to be put forward in the action plan. The working group headed by the Honourable Ronald Arculli, will study the listing rules and regulations in order to facilitate further development of our local equity market. The working group headed by Gary He (Guangbei) will study further development of Hong Kong's foreign exchange, futures and commodities trading. And the working group headed by Dr Edmund Tse will study further development of the insurance and reinsurance industries in Hong Kong and the Mainland. The working group will also study how to attract more pension funds, university endowment and private foundation funds to be set up and invest locally with the view of further strengthening and developing Hong Kong as an international asset management centre. The focus group will work out in the next three months specific recommendations along this specific direction and submit an action plan to our Chief Executive for his consideration. Views and suggestions from the financial industry are welcome.

     I would like to take this opportunity to thank all participants for their valuable contributions at today's discussions. May I also thank the Honourable Fred Ma and Dr Joseph Yam for facilitating our discussion.

     Thank you.

Ends/Monday, September 11, 2006
Issued at HKT 23:38

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