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Hong Kong welcomes more corporations and financial institutions from Brazil to make greater use of its offshore Renminbi (RMB) platform as Brazilian economic activities with China increase, said the Permanent Secretary for Financial Services and the Treasury (Financial Services), Miss Au King-chi.
At a roadshow luncheon on "Hong Kong as a global offshore RMB business hub and the opportunities for Latin America" held in Rio de Janeiro on October 2 (Rio de Janeiro time), Miss Au shared with the participants the role of Hong Kong in RMB internationalisation, and how the increasing use of RMB in international trade and finance would offer new opportunities for corporations and financial institutions in Brazil and around the world.
Miss Au also shared with the participants how the Brazilian finance and business sectors could cash in on the offshore RMB services provided by Hong Kong in trade settlement, capital market financing and asset management. "With the full support from the Chinese Central Government, through cross-border trade, direct investments and portfolio investments," she said, "Hong Kong is linking up the offshore and onshore RMB markets, and promoting the healthy circulation of RMB funds."
Miss Au pointed out that Hong Kong's deep offshore RMB liquidity pool provided significant sources of funding for Brazilian financial institutions and corporations.
Miss Au said, "We offer an international platform to bridge international liquidity with Mainland Chinese products, as well as Mainland Chinese liquidity with international products."
She remarked, "Mainland China is Brazil's largest trading partner, accounting for 16 per cent of its imports and 19 per cent of its exports. The use of RMB as a trade settlement currency will open up more business opportunities for both countries."
Miss Au said, "Hong Kong is the global hub for trade settlement in RMB, serving both local and overseas banks and corporations.
"In the first seven months of this year, the RMB trade settlement handled by banks in Hong Kong amounted to RMB3.4 trillion, accounting for 90 per cent of the external trade of Mainland China being settled in RMB."
Noting that Hong Kong had developed a unique, highly efficient and reliable clearing platform, Miss Au pointed out that the RMB Real Time Gross Settlement system in Hong Kong had extended its operating hours from 15 hours to 20.5 hours daily, i.e. until 5am Hong Kong time of the next day, to cover also the Latin American time zone.
"We welcome Brazilian enterprises to leverage our experience in offshore RMB business and settle your trade with Mainland China in RMB using the world-class infrastructure in Hong Kong. This would help you manage the risks of exchange rate fluctuations and give more certainty to business transactions. I truly believe it would be a win-win for all," she said.
"We welcome Brazilian corporations to raise RMB through listing or issuing bonds in Hong Kong for financing investments in Mainland China. We also welcome you to make use of Hong Kong's RMB lending services. This will lower Brazilian fund-raising costs and ensure greater flexibility in managing RMB funds raised in the offshore market."
On RMB as an investment currency, Miss Au said that Hong Kong hosted some 150 listed products denominated in RMB and another 330 unlisted RMB products, and more RMB investment products would come on stream. "These will create ample investment opportunities for Brazilian asset and wealth management sectors," she added.
As at the end of August 2014, there were 443 bond issuances in Hong Kong, with an outstanding amount exceeding RMB374 billion. Also, two corporations from Brazil have issued RMB bonds in Hong Kong.
Miss Au introduced to the participants the forthcoming Shanghai-Hong Kong Stock Connect programme, which would allow international investors to invest in the Mainland China stock market through Hong Kong.
"Hong Kong is best placed to leverage Mainland China's growth story and develop into a global offshore RMB hub, and will continue to strengthen our market infrastructure and financial platforms to meet evolving market needs," Miss Au stressed.
Miss Au said that the Hong Kong Special Administrative Region Government would continue to pursue further policy initiatives with the Chinese Central Government to support RMB product innovation in Hong Kong, promote cross-border RMB loans under the capital account and improve Hong Kong's RMB clearing system.
She said that, in parallel, Hong Kong will spare no efforts to create a user-friendly environment for market participants. For example, Hong Kong has modernised its companies law to facilitate business and enhance corporate governance. Hong Kong has also updated its trust law. Settlors can now establish perpetual trusts in Hong Kong. In addition, Hong Kong will introduce relevant fiscal incentives, such as providing profits tax exemption to offshore private equity funds and remove stamp duty on ETFs.
"Following global practices and maintaining market quality are the keys to sustain Hong Kong's international DNA and enhance its attractiveness to market participants from around the world," she added.
The luncheon was organised by the Hongkong and Shanghai Banking Corporation and supported by the Hong Kong Trade Development Council.
Miss Au attended the 39th Annual Conference of the International Organization of Securities Commissions (IOSCO) held in Rio de Janeiro from September 29 to October 2.
She held bilateral meetings with the leadership of overseas securities market regulators, including the Australian Securities and Investments Commission, the China Securities Regulatory Commission, the US Commodity Futures Trading Commission, the European Securities and Markets Authority and the Japan Financial Services Agency, as well as the BM&FBOVESPA - Securities, Commodities and Futures Exchange in Brazil, to exchange views on issues of mutual interest and to further promote Hong Kong as a premier offshore RMB hub.
Ends/Friday, October 3, 2014
Issued at HKT 13:57
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