Hong Kong’s financial markets have weathered disruptive headwinds during the year at a time when some of its peers are confounded by a seismic shift in the global financial landscape and the persistent threat of the COVID-19 pandemic. But as the year draws to an end, it is clear that Hong Kong’s position as an international financial center and its outlook are as strong as ever, underscored by the city’s robust capital markets and resilient financial system.
To stay ahead of the game, it is more important than ever for us to wrap our heads around the pressing challenge of weaving Hong Kong’s financial markets seamlessly into the Chinese mainland’s broader economic development and cementing the city’s future role as the country’s IFC in connecting the mainland with the rest of the world.
The Securities and Futures Commission Regulatory Forum 2021, a one-day event recently held in Hong Kong, couldn’t have come at a better time as it afforded leading individuals from the industry an opportunity to engage in spirited discussions and to map out a pathway for Hong Kong to thrive as a leading global financial center.
There was a broad consensus among panelists and participants on the remarkable strengths of Hong Kong’s IFC: While it is inevitable for an open economy like Hong Kong to face varied challenges from time to time, it is abundantly clear that contrary to the predictions of some doomsayers, Hong Kong’s financial markets have gone from strength to strength by all accounts in spite of the headwinds.
As at the end of November this year, market capitalization for Hong Kong stood at more than HK$42 trillion ($5.38 trillion), with an average daily turnover of HK$171 billion — an increase of more than 33 percent compared to the same time last year. Around HK$300 billion was raised in IPOs in the first 11 months of this year, with four of the IPOs listed in Hong Kong among the top 10 IPOs listed globally. Hong Kong is also now Asia’s largest — and the world’s second-largest — biotech fundraising hub.
There is no doubt that Hong Kong will continue to build upon the successful cross-boundary initiatives, especially at a time when developments in the Greater Bay Area switch into a higher gear and the national 14th Five-Year Plan (2021-25) comes into full swing
At the same time, the pool of talents in Hong Kong’s financial services industry remains deep and diverse, while new entrants are as keen as ever to establish footholds in the city. The number of licensed firms and individuals operating in Hong Kong has continued to grow. The total number of SFC licensees as of the end of November reached another historical high of over 48,000, reflecting Hong Kong’s continued attraction for financial firms and individual practitioners.
Another broad consensus emerging from the forum is that Hong Kong — as China’s key financial center and offshore market underpinned by a first-class regulatory regime — is well-placed to play a unique role as a bridge between the mainland and overseas markets and support the mainland’s continuing reform by intermediating financial flows between the mainland and the rest of the world as well as providing talents and cutting-edge technology. This would enable Hong Kong to become a “participant” in domestic circulation and a “facilitator” in international circulation.
To this end, Hong Kong should strengthen its position as a global leader in the fields of capital markets, offshore renminbi, asset management, banking and insurance, and help advance the mutual market access program.
The Stock Connect program — since its launch seven years ago — has become the first port of call for all leading global investors wanting a piece of the action of the ever-growing stock markets in the mainland. And new ground was broken only recently with the launch of the new A-share futures contracts as Hong Kong positions itself as a risk management center with a view to providing international investors with ways to manage their mainland exposure and hedge the attendant risks.
There is no doubt that Hong Kong will continue to build upon the successful cross-boundary initiatives, especially at a time when developments in the Guangdong-Hong Kong-Macao Greater Bay Area switch into a higher gear and the national 14th Five-Year Plan (2021-25) comes into full swing. Hong Kong’s proven track record as an IFC and its close collaboration with regulatory counterparts in the mainland will stand the city in good stead when it seeks to capture new opportunities in the mainland, including positioning itself to become a green and sustainable hub in the Greater Bay Area.
Meanwhile, Hong Kong’s vibrant and increasingly diverse listed market is on track to benefit further from the listings of pre-profit biotech companies, the “homecoming” of overseas-listed mainland enterprises, and the soon-to-be-launched regime for special purpose acquisition companies.
It is therefore very clear that Hong Kong, as a leading global financial center, is well-placed to scale new heights as the city continues to support the mainland’s ongoing reforms. Meanwhile, market participants can have full confidence that the Securities and Futures Commission will remain vigilant to risks and steadfast in upholding a fair, quality and an orderly market while working hard to bolster Hong Kong’s competitive edge.
The author is chairman of the Securities and Futures Commission in Hong Kong.
The views do not necessarily reflect those of China Daily.