Secretary for Financial Services and the Treasury Frederick Ma explains why Hong Kong’s future is assured as the perfect place to do business

Speaking at a luncheon for international chambers of commerce, he spelled out his vision of how things will evolve over the next 10 years.

 "I see Hong Kong as a major international financial centre in the Asian Time Zone, playing the twin and complementary roles of the main centre for raising foreign capital for Chinese enterprises and joint ventures in the mainland, and regional financial services hub," Mr Ma said.

Highlighting the fact that the stock exchange had achieved a turnover of HK$10 billion (US$1.28 billion) recently, Mr Ma said that Hong Kong was already the third largest equity market in Asia and ninth largest in the world.  As of end-September 2002 there were 952 listed companies, with a total market capitalisation of about HK$3,368 billion (US$433 billion). Hong Kong's securities market was also among the world's most liquid.

In 2001 total turnover was the fifth largest in Asia, at HK$1,705 billion (US$219 billion).

"We must find our own niche as the capital formation centre for China's enterprises," Mr Ma stressed. "It is only through this kind of unique character that we can keep our competitiveness." 

He pointed to how the listing of mainland enterprises had boosted the local stock market. "Of the total HK$1,594 billion (US$205 billion) raised directly and indirectly through Hong Kong since 1990, 45 per cent or HK$716 billion (US$92 billion) was for mainland enterprises. These companies now account for over a quarter (27 per cent) of our total market capitalisation, and their turnover accounted for over 36 per cent of the total in 2001."

Mr Ma said that Hong Kong has great potential for developing as a bond market. He foresaw too that it would have the largest and most varied range of international banking houses in the region.

Banking market a level playing field

The Hong Kong market for banking is now a truly level playing field for all who want to enter, Mr Ma said. He noted that since May, requirements for foreign banks seeking to enter the market, such as deposit and asset size and period of operation, had been relaxed.

 "We have one of the highest concentrations of banking institutions anywhere in the world. As at end-September 2002, we have 228 authorised institutions and 99 local representative offices. Over 70 of the world's top 100 banks have an operation in Hong Kong."

Mr Ma added: "I see tremendous growth of private banking business in Hong Kong over the next 10 years. Strong economic development in the region, particularly the mainland, will produce more high net worth individuals who require private banking services."

The financial services secretary also forecast that Hong Kong would be the region's fund management centre. "We are positioning Hong Kong as the fund management centre in Asia," he said. "We have all the right ingredients: free and abundant flow of capital, liquid financial markets, efficient financial infrastructure, the rule of law and a critical mass of professionals. And we are well connected to the China market."

"We will also be the region's centre for insurance and reinsurance," continued Mr Ma, saying he believed that, given China's growing needs, there is considerable potential for the  development of Hong Kong as an offshore insurance base, apart from its domestic market.

"Our track record speaks much louder than any advertising. We are committed to open markets. We welcome competition," he said.  "We maintain a level playing field for all market players irrespective of their place of origin.

"I see Hong Kong's role as China's international gateway being further enhanced. I have no doubt that, 10 years from now and beyond, companies around the world wishing to enter the mainland market will continue to find Hong Kong the perfect place to do business."

Related links:
Hong Kong stock exchange www.hkex.com.hk