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Speech by SFST at the Listing Conference Organised by HKEx at Almaty, Kazakhstan (English only)(With photo)

    Following is a speech by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, at the Listing Conference Organised by HKEx at Almaty, Kazakhstan today (May 11): (English only)

Hong Kong - An International Financial Centre for Kazakhstan

Mr Arystanov, Consul General, distinguished guests, ladies and gentlemen,

     Good afternoon.  It gives me great pleasure to attend the listing conference today and meet with distinguished Government and business leaders of Kazakhstan.  I would like to thank the Hong Kong Exchanges and Clearing Limited (HKEx) for organising this conference to promote understanding of Hong Kong's securities market among Government officials and companies in Kazakhstan.  

     This is my first visit to Kazakhstan.  Nevertheless, I had the honour of meeting your President and some other senior Government officials during their visit to Hong Kong in December last year and from them I learnt a lot about Kazakhstan.  I am particularly pleased to be able to visit and learn more about Kazakhstan in person this time.

     We are excited to see the growing partnership between Kazakhstan and Hong Kong in a number of areas, including financial services.  In December last year, the HKEx held a successful listing seminar in Hong Kong for the Kazakhstan's business community.  I am sure this listing conference, together with the one held in Hong Kong in December last year, will bring the Kazakhstani and Hong Kong businesses closer together, and we look forward to having quality Kazakh companies listed on our stock market.  I would also like to take this opportunity to thank the Consul General for his tremendous efforts in promoting relationship between Kazakhstan and Hong Kong.

Emerging Opportunities in Kazakhstan

     In the fifteen-and-a-half years since Independence, the Republic of Kazakhstan's impressive economic achievements have become widely recognised.  With its GDP growth of more than 9% per year in the past five years, Kazakhstan's significant progress in market reforms and economic development has impressed the international community.  Kazakhstan's macro economic outlook is indeed favourable, with her enormous fossil fuel reserves as well as plentiful supplies of other minerals and metal.  The International Monetary Fund projects Kazakhstan to attain an annual economic growth of over 8% in 2007 and 2008, exceeding the projected average growth of 4.9% for the world as a whole.  Kazakhstani growth potential is tremendous.  I also note your President's vision of turning Kazakhstan into a "regional locomotive" of the economic development and making it a successful player in the world economy in his Address this year, and Kazakhstan is advancing well towards this direction.

Hong Kong as an International Financial Centre

     As Kazakhstani enterprises develop in tandem with the rapid economic growth, Hong Kong which is a major international financial centre located at the heart of Asia with close ties with the China Mainland, provides an ideal capital formation and global investment platform.  With a market capitalisation of over US$1,734 billion at the end of March 2007, Hong Kong's stock market is the 8th largest in the world and the 2nd largest in Asia.  In 2006, Hong Kong ranked second globally in terms of IPO funds raised, surpassing New York.  Our asset management business has been expanding rapidly with total assets under management exceeding US$580 billion at the end of 2005, registering a 25% year-on-year increase.  Over 60% of assets in our fund management business originated from overseas investors.

     Hong Kong's success in maintaining our status as an international financial centre is premised on our fundamental strengths, including our rule of law, free economy with no foreign exchange control, low and simple tax regime, efficient financial infrastructure, resilient banking system and regulatory framework that is of international standards.

     Indeed, our strengths in having an open economy and providing a favourable environment for doing business are widely recognised. Hong Kong has been ranked as the world's freest economy by the Heritage Foundation for the 13th consecutive year.

     Last, but not the least, we have a deep pool of financial talent with international exposure and extensive experience.  For instance, Hong Kong has the 4th largest number of Chartered Financial Analysts (i.e. about 3,000) in the world just after the US, Canada and the UK, and the largest number in Asia.  Besides, many international well-known investment banks, law firms, accounting firms and other related professional institutions have based their Asian operations in Hong Kong.    As a matter of fact, some of them are with us on this trip.

Hong Kong as the bridge to opportunities in China

     Over the past decades, Hong Kong has been actively contributing to the economic development of the Mainland of China by providing capital, skilled personnel and a platform for interface with the international market in trade and businesses.  With this invaluable experience, Hong Kong has firmly established its position as the premier international capital formation centre for Mainland enterprises.

     Today, a total of some 370 Mainland enterprises are listed in Hong Kong covering a wide spectrum of businesses, ranging from financial institutions, telecommunications, coal and gold mining, oil and gas, automobile manufacturing, garments to supermarkets.  They represent about one third of the total number of our listed companies, 50% of the total market capitalisation and 65% of market turnover.  In October last year, we saw the mega-IPO of the Industrial and Commercial Bank of China which is the world's largest IPO, raising US$16 billion in Hong Kong.

     Investors who are eyeing the growing Mainland market will certainly find our equity market an invaluable investment platform.  In addition, the attractiveness of our equity market has been further enhanced by the enactment of legislation last year to exempt offshore funds from profits tax.

Hong Kong as an International Financial Centre Serving Kazakhstani Enterprises

     We position ourselves as an international fund raising centre for not just China, but also other parts of the world in particular those with which we have developed close cooperative relationship such as Kazakhstan.  In March this year, the Hong Kong Securities and Futures Commission (SFC) and the HKEx published a joint policy statement regarding listing of overseas companies with a view to facilitating listings of such companies by clarifying certain listing rule requirements.  I strongly encourage Kazakhstani enterprises to make use of our excellent listing platform to raise capital.  We are confident that with our extensive experience in financing the growth of enterprises in the Mainland of China, we are capable of providing quality service to Kazakhstani enterprises seeking to tap the international market.

     To summarise, we can offer Kazakhstani enterprises the following -

(a)  Liquidity - We have a large, liquid and deep stock market attracting both Hong Kong and international investors.  Over 40% of the total trading volume of our stock market comes from overseas investors.  Our fund-raising capability is well-proven.

(b)  Quality - Our regulatory regime is fully in line with international standards.  Kazakhstani enterprises may list in Hong Kong not only for funding, but also for the quality stamp well recognised by the international financial community.

(c)  Cost-effectiveness - It is more cost-effective to list in Hong Kong compared with other international financial centres, such as the US, in terms of professional fees and underwriting fees, etc.  In other words, you get the same service at a lower cost.

Closing Remarks

     Ladies and gentlemen, Hong Kong has excellent track record in the provision of financial services and is well placed to serve as the preferred capital formation and global investment platform for Kazakhstani enterprises.  The listing conference today marks a major step forward in enhancing exchange and cooperation between the business and investment community in Kazakhstan and the financial services sector in Hong Kong, following the signing of the MOU last December between the Agency of the Republic of Kazakhstan on Regulation of Activities of the Regional Financial Centre of Almaty City and HKEx.  I am sure Kazakhstan's rapid economic growth and Hong Kong's expertise in financial services would make a perfect match.

     Finally, may I wish the Conference every success.  I also hope that our friends in Kazakhstan will visit Hong Kong, Asia's world city, in the near future.  Thank you.  

Ends/Friday, May 11, 2007
Issued at HKT 17:41


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