Hong Kong: HK's position remains resilient: FS

Financial Secretary Paul Chan said today that the implementation of the National Security Law has reinforced Hong Kong's position as an international financial centre.

He also reiterated in his statement that the so-called business advisory issued by the US administration to US businesses and individuals operating in Hong Kong was totally ridiculous and unfounded.

Mr Chan noted that although Hong Kong has experienced severe challenges of social unrest and the COVID-19 pandemic in the past two years, its financial market has remained stable, orderly and vibrant, seeing active trading in stock market and has thriving initial public offering (IPO) activities. Hong Kong's banking system also continues to operate smoothly as always.

All these factors reflected that the market is full of confidence about Hong Kong's financial environment, he said.

In addition, the financial data of the past year clearly showed that investors' confidence about Hong Kong has not been shaken by the National Security Law implemented in July last year, and the development of the financial industry has been very prosperous.

The amount of IPO funds raised in Hong Kong over the past year has exceeded $500 billion, representing an increase of more than 50% over the previous 12 months. The average daily turnover of Hong Kong stocks has also reached $160 billion, nearly 70% higher than the situation before the implementation of the National Security Law.

The linked exchange rate system has also worked well as always. The Hong Kong dollar market recorded a net capital inflow in 2020. From July to October last year, the amount of funds flowing into the Hong Kong dollar system exceeded $300 billion.

At present, the total deposits in Hong Kong's banking system have increased by more than 5% over last year. The total deposits are approximately $14.9 trillion as at the end of May. The net asset value of funds management in Hong Kong at the end of last year has also increased by some 20% over the end of 2019.

Moreover, compared to the situation before the implementation of the National Security Law, the daily average turnover of northbound trading of the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect has increased over 90% to nearly RMB110 billion.

As for Bond Connect, the daily average turnover of northbound trading has also increased by more than 30% over the past year, reaching the amount of RMB23 billion.

The figures reflected that international investors still prefer using Hong Kong as a platform to invest in the Mainland's financial market, the finance chief emphasised.

He said: "We will actively discuss with the regulators in the two places about the implementation details of the cross-boundary Wealth Management Connect scheme in the Guangdong-Hong Kong-Macao Greater Bay Area and the Southbound Bond Connect.

"It is hoped to launch the two schemes early, so that mutual access of the financial markets in the two places can be further widened and deepened.

"It can also explore a huge source of clients and room for business development for the Hong Kong financial industry as well as foster the development of the local wealth and asset management business markets, which can help to further enhance Hong Kong's position as an international financial centre and a global offshore renminbi business hub."

Mr Chan added that some global financial institutions are planning to increase resources or expand their operations in Hong Kong to tap the Mainland market and to seize the opportunities arising from fintech and green finance development, reflecting investors' continued confidence in Hong Kong.

This story has been published on: 2021-07-17. To contact the author, please use the contact details within the article.

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