Speech by FS at AIMA APAC Annual Forum 2022 (English only) (with photo)
Michael (Managing Director and Co-Head of APAC, the AIMA, Mr Michael Bugel), Jack (Chief Executive Officer of the AIMA, Mr Jack Inglis), Julia (Deputy Chief Executive Officer and Executive Director, Intermediaries, Securities and Futures Commission, Ms Julia Leung), distinguished guests, ladies and gentlemen,
Good morning. It is a pleasure to be speaking, once again, at the AIMA's APAC Annual Forum. I'm delighted, too, that this year's Forum is taking place both in-person and online. That I can be here, along with some 180 professionals from AIMA and the financial services industry and the more than 300 of you taking part in this year's event online.
And what a great variety of specialisations you bring to this Forum: managers of hedge funds, private credit and equity, lawyers, accountants, prime brokers and fund administrators, investors and venture capitalists, too.
AIMA counts some 2 100 corporate members in over 60 countries and regions. Collectively, you manage in excess of US$2.5 trillion in hedge fund and private-credit assets.
Alongside financial leadership, you bring thought leadership to every region, every business, you operate in.
That's certainly clear in a reading of "Alternatives in Hong Kong: Building on the City's Strengths." More than strengths, the joint AIMA-PwC publication also addresses very real concerns about our future, from increasing competition to the pandemic and other global challenges.
What caught my attention, in particular, was this, and I quote: "…it is of vital importance and utmost urgency that the Hong Kong Government unequivocally communicate and demonstrate that the financial services sector matters."
To that, my answer is a resolute "yes": the financial services sector matters. It matters as deeply to me, and to the Government, as I know it does to you. Allow me, for the next few minutes, to tell you why.
Let me begin with those longstanding strengths, so succinctly summarised in the AIMA-PwC paper, and I quote: "Hong Kong's successful development has been driven by the city's effective legal system, competitive tax regime, balanced regulatory environment, sophisticated capital markets, deep and diverse talent pools, and close relationship with the Mainland of China, whilst also connecting with the other regional markets."
More to the point, the Global Financial Centres Index, published earlier this year, named Hong Kong Asia's top financial centre and the world's third most competitive financial centre, behind only New York and London.
Hong Kong's remarkable success is underpinned by the "one country, two systems" principle, the cornerstone of our economy. Our singular role as a bridge between the Mainland and international markets is a card no one else can play. An advantage that will continue to grow in importance as our economic integration with the Mainland continues to deepen.
Those prospects are made explicit in the National 14th Five-Year Plan. It supports Hong Kong's determination to build on our status as an international financial centre, to seize the vast opportunities, there for us, in the growing mutual access between the financial markets of Hong Kong and the Mainland.
Speaking in Hong Kong, on July 1, at the 25th anniversary of the establishment of the Hong Kong Special Administrative Region (HKSAR), President Xi told his audience – here and all over the world that the "one country, two systems" principle is to be adhered to in the long run. And he said, and I quote: "The Central Government fully supports Hong Kong in its effort to maintain its distinctive status and edges, to improve its presence as an international financial, shipping and trading centre, to keep its business environment free, open, and regulated, and to maintain the common law, so as to expand and facilitate its exchanges with the world."
Ladies and gentlemen, we are not about to let the people of Hong Kong, or you, down.
Consider Hong Kong's US$4.6 trillion asset- and wealth-management industry, more than 12 times of our GDP. Last year, 65 per cent of its funding was sourced from non-Hong Kong investors. That speaks, and clearly, of our thriving international connectivity. And to why Hong Kong is Asia's premier international asset- and wealth-management hub.
Our private-equity industry also performed well, with more than US$190 billion in capital under management at the end of June, and US$7.2 billion in private equity funds raised in the first half of this year. That puts us second in Asia after the Mainland.
At the end of March, Hong Kong was also ranked Asia's top hedge-fund centre.
To sharpen our attractiveness as an asset and wealth management hub, the Government has enhanced fund structure options available, providing competitive tax concessions, putting in place a regime to attract foreign funds to re-domicile in Hong Kong, broadening the fund distribution network, promoting the REIT (real estate investment trust) market and offering a range of other financial incentives.
A series of reforms in recent years, including the listing of new economy companies with weighted voting-rights structures and pre-revenue or pre-profit biotechnology companies, as well as the introduction of a new listing mechanism for SPACs (special purpose acquisition companies), are also making a difference for private-equity investors.
We are also determined to develop Hong Kong as a family office hub. Plans in the works include tax concessions for family-owned investment-holding vehicles managed by single family offices in Hong Kong. The target is to have tax concession coming into effect in the 2022-23 year of assessment.
We are keen, too, on ESG (environmental, social and governance), the focus of this morning's opening plenary. And I call for your support of our green and sustainable finance initiatives.
This Government will continue to work in concert with financial regulators and the industry to promote market development, align Hong Kong's regulatory standards with international best practice and develop talent.
We also encourage more entities to make use of Hong Kong's capital markets, and financial and professional services, for green and sustainable investment, financing and certification.
Since May 2019, we have issued Government green bonds totalling close to US$10 billion. They include this year's inaugural retail green bond, equivalent to about US$2.6 billion, the world's largest retail green bond issuance to date.
The borrowing ceiling of the Government Green Bond Programme has already been doubled, to some US$26 billion. And the Government will continue to issue green bonds in line with market demand.
In July, the HKEX launched the Hong Kong International Carbon Market Council, partnering with leading corporations and financial institutions.
The HKEX has also signed MoUs (memoranda of understanding) with the Guangzhou Futures Exchange and the Guangzhou-based China Emissions Exchange, to help build a green, low-carbon market in the Guangdong-Hong Kong-Macao Greater Bay Area. That, ladies and gentlemen, can only boost the internationalisation of the Mainland's carbon market.
Our growing connections with the Mainland market offer unparalleled advantages to the asset- and wealth-management industry, to you, and to our wider economy.
Last Friday, the China Securities Regulatory Commission announced that it will take forward three initiatives that carry significant meaning to Hong Kong's financial markets. First, to include securities of overseas enterprises that are primary listed in Hong Kong in the eligible scope of Southbound Trading under Stock Connect. Second, to study our proposal to set up Renminbi (RMB) securities trading counter under Southbound Trading of Stock Connect. And third, to support the issuance of Mainland government bond futures in Hong Kong.
These measures will broaden the scope for the future development of Hong Kong's securities market, particularly the internationalisation of listed companies as well as the issuance and trading of RMB securities. Not only will they facilitate Mainland investors to enrich their investment choices via Southbound Trading of Stock Connect, but also offer offshore risk management tools for Hong Kong and overseas investors to participate in Mainland government bond investments, and deepen the development of Hong Kong's offshore RMB market.
And rest assured – that we will spare no effort to take forward the relevant work, with a view to implementing the measures early.
And on the same day, the HKSAR Government and the Qianhai Authority of Shenzhen jointly announced 18 measures designed to encourage connectivity among the private-equity markets of Hong Kong and Qianhai.
The measures will enable private equity funds incorporated in Hong Kong to invest more easily in the Mainland. They will also help promote mutual access between the financial markets of Hong Kong and Shenzhen, while spurring the development of the Greater Bay Area as an international innovation and technology hub.
Then there's Cross-boundary Wealth Management Connect, launched a year ago this month.
It's the first Connect scheme created for individual investors, providing Greater Bay Area residents with a direct and convenient channel for cross-boundary investment in diversified wealth-management products.
We are now exploring measures to enhance Wealth Management Connect. These include allowing more financial institutions to participate and improving sales arrangements.
We are expanding our other Connect schemes as well, including the addition of ETFs in Stock Connect and getting regulatory approval to establish Swap Connect. That can only boost Hong Kong's status as the world's largest offshore RMB business hub.
In this, and so much more, rest assured that the financial services sector enjoys the unequivocal support of the HKSAR Government.
My thanks to the AIMA for this welcome opportunity to address you. I look forward to your continuing support. Let's continue to work together, to ensure Hong Kong's continuing status as one of the world's pre-eminent financial services centres. Thank you.
Ends/Tuesday, September 6, 2022
Issued at HKT 11:15
Issued at HKT 11:15