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Following is the speech by the Financial Secretary, Mr John C Tsang, at the Asian Banker Leadership Achievement Awards Dinner 2015 this evening (April 14):
Emmanuel (Daniel) (Chairman of the Asian Banker), Your Excellencies, distinguished guests, ladies and gentlemen,
Good evening.
I am really pleased to be here tonight because I love talking to the converted. It is always a pleasure for me speaking to an audience who shares my professional interests. As well as my personal passion too. I am talking about taking other people's money - and making good use of it, of course. For the best of reasons, let me add.
We are, each in our own way, investing in the future of our clients. In my case, that would be the people of Hong Kong. In your case, the people of Asia, now Africa, Middle East and more.
From what I have seen this evening, and from what Emmanuel had said, the future of Asian banking is in excellent hands. And that will go a long way towards ensuring that the Asian economy remains robust and it remains resilient. A growing magnet for a world of business. Of course, and banking.
As you well know, Hong Kong is big on banking. And finance in general. Indeed, should there be popular demand for an Asian Bankers' Hall of Fame, Hong Kong would be the place to establish it. It would certainly get my vote. Think Cleveland's Rock and Roll Hall of Fame - but with money makers, rather than music makers, as the star attraction. Just an idea. But imagine.
Hong Kong, after all, is Asia's regional banking centre. At last count, more than 200 banking institutions are operating here, most of them, probably all of them profitably, including 71 of the top 100 banks. And, in the latest Global Financial Centres Index, out last month, Hong Kong remained third, behind only New York and London, among nearly 100 global financial centres.
There are plenty of bankable reasons why Hong Kong has long been one of the world's leading financial capitals. Certainly, maintaining that fine balance between financial stability and market development is critical.
Stability naturally leads us to regulation. Not, I should think, a popular topic among you folks. That said, I am sure you are all up to date on your Basel III, on your OTC (over-the-counter derivatives), on your AML (anti-money laundering) and whatnot.
What I would like to draw your attention to is the unpredictability that we face this year. It is the risks behind such unpredictability that makes regulatory requirements a necessary fact of banking life.
The outlook for the United States is relatively promising compare to other centers. But that said, the timing and pace of the imminent interest rate normalisation is generating concern, particularly over the ability of emerging economies to manage the resulting capital flow swings. Perhaps another round of taper tantrum?
The Mainland is on a steady growth path, but downward pressure remains in the near term amid a weak global economy. Deflationary risks look set to continue to haunt the Eurozone and Japan because there remains much uncertainty about whether these regions will be able to build up enough growth momentum soon given the many structural issues that are persisting. Sagging oil prices, heightened geopolitical tensions and terrorist attacks add to the fog that blankets a clear economic outlook. The fog now what we call "sits looking over harbor and city". If only - as in Carl Sandburg's classic "Fog" - it would move on.
Unfortunately, our increasingly globalised financial world has only expanded that fog, making prudent regulation even more necessary. Of course, regulation without market development measures won't work, either. But, Hong Kong Government's unswerving commitment is what banking - what banks and bankers - can anchor their confidence in.
It is with this in mind, with the economic fog in place, that I delivered my eighth Budget less than seven weeks ago. In it are a variety of considered initiatives designed to broaden and to deepen markets. Let me mention a few of them here for your information.
Hong Kong is the world's largest offshore Renminbi (RMB) centre, and we shall continue to build on this, to strengthen our business ties with the Mainland as well as with the financial world at large.
We have already developed a highly efficient Renminbi Real Time Gross Settlement system. This links the Mainland, Hong Kong and major financial centres, helping banks from all over the world make RMB payments in real time. We shall seek to increase our investment quota for the RQFII scheme, and work towards early implementation of the arrangement for mutual recognition of funds between Hong Kong and the Mainland.
The recent strong performance of Hong Kong stock market also is in the spotlight. Last week, the Hong Kong Hang Seng Index surged by some 2 000 points, with the market turnover rising to an all-time high of some HK$300 billion last Thursday.
Following the smooth implementation of the Shanghai-Hong Kong Stock Connect, last November, both the southbound as well as the northbound trading turnovers broke their respective single-day records last week. We are now looking at enhancing the scheme and working to launch the Shenzhen-Hong Kong Stock Connect. I look forward to the healthy development of this unique access between the Mainland and Hong Kong.
To attract corporate treasury activities in Hong Kong, we are now drawing up amendments to the Inland Revenue Ordinance. This will allow interest deductions under profits tax for corporate treasury centres in Hong Kong. It will also introduce a half-rate regime for qualifying corporate treasury activities. This will mean enormous business potential for the financial industry, for banks in particular, to provide corporations with high-value financial services.
As a wealth and asset management centre, Hong Kong also offers unlimited promises. Our combined fund management business stands at a record high HK$16 trillion. The Hong Kong Government is determined to work with the market, to capitalise on these opportunities.
The stamp duty waiver for ETFs (exchange-traded funds) took effect two months ago. And we have just introduced a Bill into LegCo to allow private equity funds to enjoy the profits tax exemption now available to offshore funds. We are also working to introduce an open-ended fund company structure.
To fully capitalise on the opportunities, however, the sector needs more - more of people like yourselves. More gifted human capital to count on. To build on. That's the reasoning behind also my $100 million, three-year pilot training scheme that has been instituted. The new programme will complement the enhanced competency framework for private wealth management practitioners, rolled out just last June. It will enjoy the support of our (Hong Kong) Monetary Authority and the industry in general, in promoting wealth management services that meet customer needs.
Ladies and gentlemen, if the economic road ahead remains, in places, shrouded in fog, we might take heart in this, from former US Treasury Secretary Tim Geithner. He said that, and I quote, "Most consequential choices involve shades of gray,¡¨ and that was an interesting movie, by the way, ¡§and some fog is often useful in getting things done."
Mr Geithner, who now heads Warburg Pincus, when he is not predicting the weather, is, of course, right. With proper management, sound strategies and prudent planning, risk can yield plenty of opportunities. It has worked well for us in Hong Kong - and Hong Kong banking, thanks to many of you here this evening. And that certainly makes tonight's awards worth celebrating. Worth applauding.
My congratulations to the winners. I know you will enjoy this very special evening. And drive home safely. It's foggy out there.
Thank you very much and have a great day. Hopefully, remember this one thing, shop a lot. Thank you.
Ends/Tuesday, April 14, 2015
Issued at HKT 22:15
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