Email this article news.gov.hk
FS' speech at Asia Securities Forum 2008 Gala Dinner (English only)(with photo/video)
*****************************************************

     Following is the speech by the Financial Secretary, Mr John C. Tsang, at Asia Securities Forum 2008 Gala Dinner this evening (September 5):

     Kenny (Lee), Distinguished Guests, Ladies and Gentlemen,

     Good evening.

     It's a great pleasure for me to join you here for this Gala Dinner. First and foremost, I wish to congratulate the Hong Kong Stockbrokers Association on hosting the Asia Securities Forum.

     This is the first time this Forum has been held in Hong Kong, and I am truly delighted to see so many friends from around the region taking part.

     Since the first Asia Securities Forum held in Japan in 1995, we, the economics in the region, have encountered many hurdles, some unique to our own economy and others that have affected the entire region.

     A decade ago ¡V in the third quarter of 1998 ¡V the Asian Financial Crisis was biting hard. In Hong Kong, property and stock prices were down 50 per cent on their peaks only 10 months earlier. A decade ago today, the closing price of the Hang Seng Index stood at 7,488 points, roughly a third of what it is now.

     Fast forward to the present day and we are facing headwinds of a different kind, nicely summed up in the theme of this year's Forum: "The Asia Era: Challenges and Opportunities for Asia Pacific after Sub-Prime".

     With this theme in mind, I encourage every one to make the most of this Forum as a platform to strengthen regional financial co-operation and understanding to rise to the challenge and to grasp the opportunities in "The Asia Era".

     Having survived the Asian Financial Crisis and prospered in recent years, our economies have shown resilience to the current financial turmoil brought on by the sub-prime lending problem in the US.

     In the next few minutes, I shall talk about Hong Kong as a fund raising centre in Asia and our role as China's global financial centre.

     As a fund raising centre, we depend on a vibrant and robust stock market. I wish to take this opportunity to thank the Hong Kong Stockbrokers Association for representing the interests of the industry over the past three decades.

     Our stock market is the 7th largest in the world and the 3rd largest in Asia, with a market capitalisation of over US$2.1 trillion at end-July. We have some 1,260 listed companies covering a wide variety of sectors. They include financial institutions, automobile manufacturers, supermarkets, telecommunications, coal and gold mining companies and oil and gas firms.

     In terms of IPO funds raised in the first half of this year, Hong Kong ranked fourth in the world and second in Asia. As at end-July, total IPO funds raised amounted to almost US$7.4 trillion.

     As China's global financial centre, Hong Kong is a springboard for Mainland enterprises wishing to tap international capital markets.

     Some 450 Mainland enterprises are listed on the Stock Exchange of Hong Kong, comprising more than one-third of total listings. They account for 57 per cent of the total market capitalisation and about 70 per cent of daily turnover. Through Hong Kong, Mainland enterprises have raised over US$245 billion since 1993, when Tsingtao Brewery Company became the first Mainland firm to list in Hong Kong.

     Over the years, we have remained committed to our fundamental strengths, including the rule of law upheld by an independent judiciary; a freely convertible currency that has been pegged to the US dollar since 1983; clean and efficient government and zero tolerance of corruption. We believe in a low and simple tax regime, and we maintain a regulatory framework that meets international standards.

     These are some of the reasons the US-based Heritage Foundation has named Hong Kong as the freest economy in the world for each of the past 14 years.

     A similar study in Canada by the Fraser Institute has placed Hong Kong number one in its Economic Freedom of the World Report every year since it began in 1996.

     In a sign of support for our economic philosophy, the Fraser Institute will announce its 2008 report here in Hong Kong later this month and hold a Gala Dinner entitled "Celebrate Hong Kong".

     These studies are important because they let us know if we are on the right track, and flag areas of concern that may require attention if we should stray.

     We are doing fairly well, but a free and open economy is only part of the puzzle. Allow me to highlight a few others.

     Firstly, access to capital.

     Hong Kong's combined fund management business amounted to over US$1.2 trillion in 2007. That's an increase of 57 per cent compared with 2006. These figures come from the Fund Management Activities Survey 2007 released by our Securities and Futures Commission (SFC) in July. The survey also showed total assets under management in Hong Kong amounted to US$835 billion, of which around 30 per cent was invested in Hong Kong.

     In the first half of this year, the average daily turnover by value of our stock market was over US$10 billion ¡V a more than 30 per cent increase year-on-year.

     Local and overseas investors participate in our securities market, as well as institutional and retail investors. Overseas investors take up more than 40 per cent of the total cash market transaction.

     Investors are attracted by our tax system. No capital gains tax, no dividend tax, no estate duty and no profits tax on offshore funds. They also like our diverse financial products.

     In July this year, the first gold exchange traded fund, or ETF was launched in Hong Kong. Hong Kong is now the second largest ETF market in Asia after Japan in terms of market capitalisation.

     My second point is corporate governance. The Government has placed a strong focus on raising standards of corporate governance since the Enron scandal broke in the US in 2001.

     Our hard work has paid off. Hong Kong is recognised as a regional leader in corporate governance, and companies can upgrade their corporate governance standards with their listings here.

     My third and final point relates to Hong Kong as an international financial centre that is fully plugged into the global trading network. The Global Financial Centres Index published by the City of London in March this year again placed Hong Kong third in terms of financial centre competitiveness. Only London and New York were placed higher.

     Our location in the East Asian time-zone, midway between London and New York puts Hong Kong in the thick of the action in the 24-hour financial trading day.

     So where do we go from here?

     For one thing, we are determined to attract more quality enterprises from around the world to list in Hong Kong and enhance the competitiveness of our listing platform.

     In March last year, the SFC and the Hong Kong Exchanges and Clearing Limited (HKEx) published a Joint Policy Statement Regarding the Listing of Overseas Companies. The policy statement was aimed at facilitating the listing of overseas companies in Hong Kong.

     And in July this year, the HKEx launched the framework for issuers to list in Hong Kong through Hong Kong depositary receipts or HDRs. This provides an alternative listing route for issuers.

     The Government will continue to promote Hong Kong as a preferred listing venue. Our Chief Executive has led a delegation to Kuwait, Saudi Arabia and the United Arab Emirates in January this year to drum up interest among Middle Eastern companies. This coincides with our work in establishing a platform for Islamic finance in Hong Kong.

     Earlier, I had the pleasure of visiting India and Central Europe during which I highlighted Hong Kong's attributes as a fund raising centre.

     Our Secretary for Financial Services and the Treasury, Professor K.C. Chan, took the same message to Vietnam, the US and Russia on recent trips to promote Hong Kong as a listing venue.

     Ladies and Gentlemen, despite the difficulties currently facing global financial markets, the growth momentum for this region remains positive.

     I am confident that the continued economic growth and wealth creation in the Asia Pacific will continue to ensure that our financial markets will remain strong.

     I wish you all a successful Forum and an enjoyable stay here in Hong Kong.

     Thank you.

Ends/Friday, September 5, 2008
Issued at HKT 20:47

NNNN

Photo
Print this page