Speech by FS at the Chamber of Hong Kong Listed Companies 20th Anniversary Celebration cum Hong Kong Corporate Governance and ESG Excellence Awards 2022 Gala Dinner (English only) (with photo/video)
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Catherine (Chairperson of the Chamber of Hong Kong Listed Companies, Ms Catherine Leung), Mike (Chief Executive Officer of the Chamber of Hong Kong Listed Companies, Mr Mike Wong), Chris (Secretary for Financial Services and the Treasury, Mr Christopher Hui), distinguished guests, ladies and gentlemen,
Good evening. Catherine, thank you for your most motivating and reassuring speech. I am delighted to join you all for this Gala Dinner. Let me start by congratulating the Chamber of Hong Kong Listed Companies on its 20th anniversary. Also, heartiest congratulations to the recipients of this year's Corporate Governance and ESG Excellence Awards.
Over the past 20 years, the Chamber has made immense contributions to enhancing Hong Kong's position as an international financial centre. By strengthening collaboration and communication between listed companies and financial regulators as well as the Government, the Chamber has played a pivotal role in driving the development of Hong Kong's financial market.
With this year also being the 25th anniversary of our return to the motherland, allow me to share some figures that highlight the remarkable development of our stock market: at the end of 1997, there were just 658 listed companies with an aggregate market capitalisation of US$413 billion. By the end of last year, the number of listed companies had grown to over 2,500, and the market cap exceeded US$5,400 billion. This is indeed a remarkable achievement. It is also one indicator of how our city's financial markets have become more mature, liquid and diverse under the "one country, two systems" policy.
Having weathered some turbulent times over the past few years, we can all be reassured by recent developments. Hong Kong is firmly back on the global financial stage in the wake of the COVID-19 pandemic. The Global Financial Leaders' Investment Summit, the Hong Kong Fintech Week and the Rugby Sevens demonstrated Hong Kong's trademark vitality, and our readiness to reconnect with the international world. And from my discussions during my visits to the Middle East and to the G20 Leaders' Summit in Bali last month, I can assure you that the international community is very keen on reconnecting with Hong Kong.
However, we are not entirely out of the woods just yet. With heightened geopolitical tensions, inflation at levels not seen for decades, as well as aggressive and prolonged tightening of monetary conditions by major central banks, the global economic outlook remains extremely challenging. Amid the uncertainty and the weak sentiment across global securities markets, Hong Kong once again shows its famous "can do" spirit. Our stock market continues to be among the world's top five platforms for IPOs (initial public offerings). As at the end of October this year, more than 60 company listings had together raised over HK$85 billion.
Our city's resilience should surprise no one. Hong Kong's unique advantages are anchored by the success of the "one country, two systems" policy which makes Hong Kong the only place in the world where the global advantage and the China advantage converge. We stand as an irreplaceable gateway that links the Mainland with the rest of the world, and vice versa. Our position was reaffirmed by President Xi Jinping, who said on July 1, on the occasion of the 25th anniversary of the Hong Kong Special Administrative Region (HKSAR) establishment, that the "one country, two systems" policy must be adhered to in the long run. The Central Government fully supports Hong Kong in maintaining our distinctive status and edges, and in improving our competitiveness as an international financial, shipping and trading centre. Full, faithful and resolute implementation of "one country, two systems" have also been part of the constitution of the country, and that of the Communist Party of China.
Enhancing our position as a global fundraising platform
As a go-to listing venue for companies around the globe, the Government, financial regulators and HKEX (Hong Kong Exchanges and Clearing Limited) have been working hand in hand to ensure that our listing regime moves with the times. Recent reforms, including facilitating the listing of new economy companies back in 2018, have proven successful. Today, Hong Kong is the world's No. 2 fundraising hub for biotechnology companies .
Looking ahead, we support HKEX's initiative in revising the Main Board Listing Rules to facilitate the fundraising of large-scale advanced technology research enterprises that have yet met the profit or trading record requirements. A two-month consultation on this subject was launched in October. Subject to market feedback, HKEX aims to launch the regime in the first half of 2023 to enable such companies in the specific sectors primarily engaged in the research, development and commercialisation of products and services to raise funds through IPOs.
HKEX will also explore revitalising GEM (Growth Enterprise Market) to provide a more effective fundraising platform for small and medium enterprises as well as start-ups. This would further enhance our all-round competitiveness as an international fundraising hub.
Promoting mutual market access
Apart from revamping the listing regime, we will continue to strengthen our role as a financial super-connector between capital markets of East and West. The deepening and expansion of mutual access with the Mainland have generated remarkable cross-boundary market liquidity and vibrancy for issuers as well as investors. Since 2014, the daily trading of Mainland stocks by Hong Kong and international investors under Stock Connect Northbound had risen by more than 20 times to about RMB120 billion in 2021. At the same time, trading by Mainland investors in Hong Kong stocks under Stock Connect Southbound increased more than 40 times to about HK$42 billion.
Riding on this momentum, we welcomed a number of breakthroughs this year. The inclusion of ETF (Exchange-traded Funds) under Stock Connect has been widely accepted by the market since its commencement in July. In just four months since its launch, the Northbound average daily trading volume increased from about RMB20 million to about RMB40 million in October; the Southbound average daily trading volume surged from about HK$220 million to over HK$880 million.
Currently, we are working at full steam on the implementation of the mutual access arrangements recently supported by the China Securities Regulatory Commission. Among them are the inclusion in Stock Connect of securities of overseas enterprises that are primary listed in Hong Kong; setting up an RMB counter eligible for shares in the Southbound Stock Connect; and issuance of Mainland government bond futures in Hong Kong. As a facilitating measure, we introduced a bill to exempt the stamp duty payable for transactions conducted by dual counter market makers. We also aim to complete preparations for the Northbound trading of Swap Connect as early as possible. This, together with the MSCI A50 Connect Index futures contract launched last October, are important risk management tools that will facilitate additional investment in the Mainland capital markets while also contributing to their further opening-up.
Upholding market quality
In tandem with promoting market development, we must also enhance market quality. This brings us to a key theme of tonight’s Gala Dinner – corporate governance, which is the fundamental building block that underpins the integrity and efficiency of our capital markets.
Continuous efforts have been made to improve corporate governance of listed issuers and maintain a high level of investor protection. In January, HKEX implemented a common set of Core Shareholder Protection Standards to address the difference in shareholder protection standards under the laws of different jurisdictions. In the same month, a Revised Corporate Governance Code was also introduced to improve corporate governance standards and practices among listed issuers. It covers various areas such as corporate culture, board independence and refreshment, diversity, shareholder communication, and ESG (Environmental, Social and Governance).
Upholding market quality requires the concerted efforts of all parties. The Chamber has been a key stakeholder and has long been a keen advocate for excellence in corporate governance practices and ESG performance, encouraging issuers to go the extra mile by embracing these values in their culture. My heartfelt gratitude to the Chamber for its relentless efforts in this respect. I also warmly congratulate the recipients of the 2022 Corporate Governance and ESG Excellence Awards. These Awards are not just a recognition of their achievements, but also motivation to encourage others in striving for the highest standards in corporate governance.
Ladies and gentlemen, as we near the end of a particularly eventful year, I thank the Chamber and its members for your many contributions to boosting the development and quality of our market. As we continue to reconnect with the Mainland and the international business community, I know the HKSAR Government can count on your support to further strengthen Hong Kong's competitiveness as a premier global financial centre.
I wish you all an enjoyable evening, a happy festive season and a healthy and prosperous year ahead. Thank you.
Ends/Tuesday, December 13, 2022
Issued at HKT 22:22
Issued at HKT 22:22
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Audio / Video
FS attends the Chamber of Hong Kong Listed Companies 20th Anniversary Celebration cum Hong Kong Corporate Governance and ESG Excellence Awards 2022 Gala Dinner