Speech by CE at 17th Anniversary of HKEX Cocktail Reception (English only) (with photos/video)
C K (Chairman of HKEX, Mr Chow Chung-kong), Charles (Chief Executive of HKEX, Mr Charles Li), distinguished guests, government colleagues, ladies and gentlemen,
Good evening. I am pleased to join you in celebrating the 17th anniversary of the Hong Kong Exchanges and Clearing Limited.
I am very pleased to see so many of you here despite the typhoon warning. I do hope you realised that there is a typhoon warning out there. The weather outside right now and this particular venue remind me of a seminar hosted by the Hong Kong Society of Accountant about ten years ago. It was pouring outside. I think we had a black storm warning. The seminar wasn't cancelled and I arrived half and hour late. Half of my audience did not have an umbrella and I was the only person who was soaking wet because I drove myself down from the Peak to get here. I think there is a moral there, use the trains, don't drive, particularly if you are over 65.
In less than three weeks, we will also celebrate the 20th anniversary of Hong Kong’s return to China. Over the past two decades, Hong Kong has optimised the combined advantages of "one country" and "two systems" - so that we are the "super-connector" between the rest of China and the rest of the world.
The HKEX, I am pleased to say, is a splendid illustration of our "super-connector" role in action. After all, more than 1 000 Mainland companies are listed on our stock exchange, accounting for more than 60 per cent of the total market capitalisation.
Mainland issuers – among others – use Hong Kong as their springboard to "go global". Last year, for the second year in a row, Hong Kong topped the world in funds raised through initial public offerings. In fact, we have been among the world's top five in IPO fund-raising since 2002 – just two years after the launch of HKEX.
And 25 years ago, in August 1992, I was one of the speakers at the Symposium on Securities Markets held in Shanghai jointly organised by the Hong Kong Society of Accountants and its Mainland counterparts. Some of you may know that in my previous life, I had some professional association with the securities markets in Hong Kong and its formation in the Mainland. The then Chinese Vice-Minister of Finance, Mr Zhang Youcai, said in his opening address: "In the first half of this year, the number of stocks listed in the Shanghai and Shenzhen stock exchanges was about 40, and the market capitalisation was over RMB 60 billion." The Vice-Minister actually quoted these numbers with a justifiable sense of pride, and he also noted that Taiwan's securities market, both in terms of turn-over and scale, was first among the Four Asian Tigers. As you know, as far as the Taiwan numbers are concerned, it's history.
Nowadays, the Shanghai and Shenzhen Stock Exchanges, together, count some 3 300 listed companies with a total market capitalisation of about RMB 52.4 trillion – an increase of 873 times compared to 1992.
So the past 25 years have seen the rapid development of the Mainland securities markets and the ongoing growth potential for the Hong Kong securities industry, HKEX included. The launch of the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, for example, were groundbreaking initiatives that helped spur the development of capital markets in all three places.
We are now looking to expand our connectivity to other asset classes. Last month, the People's Bank of China and the Hong Kong Monetary Authority announced the approval for the launch of a Bond Connect. That new offering will allow overseas investors to access, for the very first time, the Mainland interbank bond market.
Hong Kong's "super-connectivity" has given us an edge in the country's development initiatives, including the Belt and Road, and the Guangdong-Hong Kong-Macao Bay Area development. The latter, covering 11 prosperous cities in China with a total population of 66 million, will bring unprecedented opportunities for both Hong Kong and the Mainland's financial industries. With the heavy investments in such new infrastructure as the high speed rail, the Hong Kong-Zhuhai-Macao Bridge and the Liantang/Heung Yuen Wai boundary control point and its associated road network, all of which are scheduled to open in about 18 months, the 9 Mainland cities in the Bay Area region will be brought to within 90-minute travel radius from Hong Kong. There will be more liberalisation measures in these cities, bringing numerous opportunities to Hong Kong companies, including the securities brokerage sector. I can go on record to say that, in my assessment, if we are quick enough off our feet and if we do it properly without the hindrance of petty domestic politics – say filibustering in the Legislative Council – the benefits that we can derive from the Bay Area development will be more significant than those brought to us by the Mainland's opening up and reform in the past thirty to forty years.
These opportunities include, of course, what HKEX is good at – fundraising through a great variety of channels in Hong Kong and through Hong Kong. Two months ago, the Securities and Futures Commission issued a statement explaining its approach to the listing of infrastructure project companies. This will provide a clear path for companies wishing to list in Hong Kong.
Hong Kong, of course, also stands out in offshore Renminbi services, asset and risk management, corporate treasury services, insurance and reinsurance. Over the past five years, my Government has attached great importance to promoting such services. We had, for example, waived the stamp duty for transfer of all exchange-traded funds, extended profits tax exemption for offshore funds to private equity funds, and introduced a concessionary profits tax rate for qualifying corporate treasury centres.
As the term of my Government comes to an end, in a couple of weeks, a comprehensive and point-by-point report covering the work of this Government in the past 5 years will be released. In it, you will find also a summary of this Government's work on financial services. All in all, the sector has done well, as shown in the increase in its contribution to GDP from 15.9 per cent 5 years ago to 18 per cent now.
And there are a couple of initiatives in the pipeline to facilitate the development of the securities and futures markets.
Starting this month, the enhanced position limit regime for futures and options contracts has come into operation. The enhancements will encourage more market participants to conduct derivative activities on exchange markets.
I know HKEX is looking to review the positioning of the Growth Enterprise Market, as well as the introduction of a new board. On this, and other strategic issues concerning the financial industry, we look forward to hearing your views.
Ladies and gentlemen, Hong Kong has come a long, good way in HKEX's 17 years. I congratulate HKEX on its remarkable achievements, and look forward to more of its success in the next 17 years.
Ends/Monday, June 12, 2017
Issued at HKT 20:18
Issued at HKT 20:18