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Financial development in 2010s and way forward (with photo)

     The Permanent Secretary for Financial Services and the Treasury (Financial Services), Miss Au King-chi, today (September 17) recapitulated the Government's and regulators' work in the first half of the 2010s in improving the quality of our financial market, and offered views on how Hong Kong's financial services industry could consolidate its unique position.

     Speaking at a seminar titled "Half-way Through the 2010s and Way Forward", Miss Au pointed out that the financial industry had witnessed robust growth in the first half of the 2010s, as indicated by a 45 per cent expansion in equity market capitalisation since 2009 as well as a doubling of banks' loan portfolios, asset managers' assets under management and life insurance premiums in the same period.

     While saying that Hong Kong's financial system has withstood periodic shocks since 2010, she stressed that given the openness of our market, there was no room for complacency in ensuring financial stability.

     "Sustaining our 'international' DNA by adopting global practices and maintaining market quality are keys to enhance our attractiveness to the '3I' s, namely issuers, intermediaries and investors, from around the world and keep Hong Kong well-connected with the global financial system," Miss Au said.

     She added, "To enhance market quality, we are pursuing an active policy agenda to improve our regulatory regime for better investor protection, more efficient market infrastructure, as well as market-friendly statutes and rule books.

     "Public consultations on the Deposit Protection Scheme and Risk-based Capital framework for insurers have just been rolled out, and the legislation for a scripless securities market was introduced into the Legislative Council this June."

     Miss Au also noted that regulatory regimes for both the insurance sector and auditors of listed entities would have to be reformed so that their regulators would become more independent of their industries and the Government.

     She said that market practitioners' ability to offer value-added services was being handsomely rewarded. Yet continued strengthening in the quality of practitioners was not only necessary for maintaining the stability and robustness of our financial market, but also paramount for sustaining its development.

     "We are exploring measures to nurture human capital. They include publicity drives on financial careers, programme-based scholarships for students, financial incentives for in-service practitioners and young people to obtain professional qualifications, and exposure schemes such as trainee programmes and internship network," she said.

     She further quoted measures to develop potential growth areas, such as exploring incentives to attract corporate treasury activities, launching government sukuk, waiving the stamp duty for all exchange-traded fund trading, and exempting profits tax for offshore private equity funds.

     Noting that promoting the international use of Renminbi (RMB) has been a key theme in the 2010s, and would likely remain so for the rest of the decade, Miss Au said good progress had been made for the RMB internationalisation trilogy, and Hong Kong should contemplate how best to support our country in consolidating RMB's status as a trade and investment currency and eventually, an international reserve currency.

     She said, "With the support from the Central People's Government, the cross-border use of RMB in trade and investment transactions shifted into a higher gear in the 2010s. The Government has been working closely with the industry to broaden the range of RMB products. For retail investors, we host some 150 listed products denominated in RMB, and another 120 Securities and Futures Commission-authorised unlisted RMB products like funds and structured products.

     "We would continue to upgrade our RMB infrastructure. For instance, with effect from October 1, the operating hours of our RMB Real Time Gross Settlement system will be extended from 15 hours to 20.5 hours daily (i.e. until 5am of the next day) to cover both the European and American time zones."

     Miss Au added that the Shanghai-Hong Kong Stock Connect scheme, together with the mutual recognition of funds, pointed to another innovative way for Hong Kong to act as a "super-connector" for the Mainland and the global market with proper regulatory safeguards. At the same time, the implementation of Stock Connect will attract more investors and hence liquidity in our fund-raising platform by instantly adding 568 A-shares to the trading platform.

     Stressing the importance of consolidating Hong Kong's unique position, Miss Au opined that the Government would need to join hands with the market to consolidate Hong Kong's strengths and leverage its unique advantage as China's truly global financial centre while the Mainland's financial market was opening up and Mainland enterprises were going global.

     "It is a blessing for China to have two financial systems in the Mainland and Hong Kong. And we should proactively leverage our unique position under 'One Country, Two Systems' to better serve market participants from Hong Kong and elsewhere, including the Mainland. We should give thought as to how our international financial platform can better support Mainland enterprises in 'going global'.

     "We welcome Mainland enterprises to set up their regional and global treasury centres in Hong Kong to manage their overseas operations. We are well placed to provide value-added services for meeting their investment and funding needs, managing their exposure and implementing risk management strategies. At present, we are examining ways to further strengthen our competitiveness in attracting Mainland enterprises to manage their global treasury activities in Hong Kong," said Miss Au.

     The seminar was organised by the Hong Kong Securities and Investment Institute.

Ends/Wednesday, September 17, 2014
Issued at HKT 15:20


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