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Question: I'd like to ask a question about Hong Kong Market versus Shanghai... Now if China's currency becomes convertible, do you think that would have a big impact on the Hong Kong market...
Chief Executive: I'm sure it would. It would enhance Hong Kong's position, but I do not see how Shanghai comes in the equation, but since you ask, let me answer you. Shanghai is a great city, the great industrial strength of our nation, it is a very big financial market, it is handling a lot of domestic finances, and I'm sure over time it will be a very sizeable and very dynamic international financial centre, for that matter. But what is important is the prerequisites of Hong Kong, and what we are and what we're able to offer our customers, our investors, today, and to come. And we never stand alone, we always try to improve ourselves, distancing ourselves from all the fierce competitors as a regional financial centre in the area, be it Tokyo, Singapore, Shanghai or Seoul. What is important is that we maintain the prerequisites that very few others are able to offer. I do not want to repeat them, I mentioned some of them. But you're right, the convertibility of Renminbi will be a big event, not only for Hong Kong but for all the world. And as part of the nation we hope that this will materialise soon, but it is not that easy to come about. And the important thing is, particularly with the turbulence of this particular crisis of ours would certainly make all national leaders to think hard about how they go about achieving greater participation in global economy through currency integration. It is a very tricky subject for a huge economy like China. Just to mention a few others, for instance, Korea and Taiwan have been trying to make their currencies convertible for the last 50 years and still, they are still struggling with certain institutional arrangement difficulties. And for a nation much larger, with a much larger economy like China, and particularly for the huge banking systems, with very traditional practices, it may not be easy assimilated with the rest of the world. It will take a much longer time. But when that happens - and I do not know when - well I'm sure Hong Kong at least will think about for instance our own currency link to the US dollar, that give us another option, but that will be many many many many years down the road. And even when that happens, you ask yourselves about global financial centres. After centuries of work, New York is still commanding financial centre serving the whole of Americas, north and south. And London, after centuries of competition among all other capitals, even after the creation of the euro, it is still the market servicing western Europe, despite the competition coming from Frankfurt, from Paris and so on. In other words, whether we like it or not, each region is likely to be able to afford one huge global financial centre serving the time zone. In Asia I know where my money is, and it is right here that it will happen. We have all the prerequisites, we have good concentration of experts, the critical mass is already here. We have the convertibility of the currency, and we have also, most important you'll discover, a common law jurisdiction which is familiar to all financial operators around the world. One of the real assets, I hazard a guess, of London as a strength for the euro market compared with Bonn, compared with Frankfurt or Paris is probably two things: First is a critical mass of financial experts actually living, choosing to live in London, and second, because of the common law, as against Continental legal system. Hence you will find that the financial centre in Australia is doing well, New York's doing well, London's doing well, similarly in Hong Kong. So we've got the strengths and our sight is quite focused. And particularly against the backdrop of the financial crisis, my challenge is not to overcome the problems that come our way - we have experience of that as a result of our battle and our wars waged against us in 1998 and 1997 - but what is important for me is to leverage this particular challenge to our advantage, to narrow our gap between ourselves and the likes of New York and London at the end of the crisis, ensuring our position as the global financial centre of the East Asian time zone. And with the backing of the huge economy of the mainland of China we should be pretty well off. Well, I'm not complacent, I'm working hard. But the comparison with Shanghai in this context is perhaps premature in my view.
Question: In previous crises there have been suggestions that one way that Asia could help itself and help other countries within the region to manage through the crisis and emerge stronger is perhaps by joining an Asian monetary union. I'd be interested to hear what your views are on the concept of an Asian monetary union in the current circumstances.
Chief Executive: I'm all for it. We started talking about it in 1998 and on each and every opportunity when it arises I talk about it again. I do not believe in the strength of independent small currencies, like the one in Hong Kong, Hong Kong dollar and so on, so it has to be linked to a powerful agency. The world has come to a position that stability is so important, certainty is so important. Currency volatility does not help trade, does not inspire confidence. That was why we have NAFTA combining the economies in the Americas into one big, big, big currency union. And you have got Europe joining together exactly for that reason. And for Asia, we have to work hard on this. And I agree this is a thing we have to work, and this is a grand opportunity for doing so. But we have a rather turbulent history which drives us apart, but the crisis will help us concentrate our mind on the opportunity it offers and the stability world economic growth demands. And Asia, we will just rank equal to the Americas and Europe before too long in terms of economic size, liquidity and transactional volumes. In that regard, they need common platforms; one of such platforms, in my view, will be currency alignment of some sort. This is something we need to work for. But I must say it's not easy. People have been saying, well, the Hong Kong economic cycle, for instance, is even out of sync with Singapore for a few months. But if we were able to see economies as widely different as Greece from Spain, or Ireland, there's no reason why Asia cannot come together. But that will await certain things. We'll have to wait for the convertibility of the currency of China, a major economy. If any such union is without the mainland of China it will not work. So that is a thing we are waiting for, and at the same time, in the meantime we can talk and discuss about this. Anyway the Europeans discussed and talked about it for 50 years before it came into being, and this is the time we should talk seriously about it now. Thank you very much.
Ends/Tuesday, March 24, 2009
Issued at HKT 18:31
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