The future of Hong Kong as an international financial centre

As a global monetary centre, Hong Kong serves as mainland China’s gateway to the world. As a longstanding pillar of this metropolis, HSBC is proud to play a pivotal position in connecting the East and the West.

The resumption of regular journey between Hong Kong and the mainland this yr gave an on the spot enhance to the circulate of individuals and items. Given the advanced and unstable exterior atmosphere, there’s an ever-increasing have to strengthen Hong Kong’s position as a “super-connector”, which is the cornerstone of its place as a global monetary centre.

I imagine that Hong Kong will proceed to be a capital and expertise hub for mainland China and the remainder of the world, so long as we make the most of the massive alternatives within the mainland market, preserve our famend authorized system, and play by the foundations of the worldwide market.

After the gradual rest of Hong Kong’s epidemic prevention measures because the fourth quarter of 2022, market sentiment has change into way more constructive. Guests and traders from around the globe have returned to Hong Kong after greater than two years and took part in a number of main occasions. At HSBC, members of the Board of Administrators visited Hong Kong late final yr and members of the Group senior administration in March.

Over the previous few months, I’ve visited cities within the Center East, Singapore and mainland China to fulfill with companies, traders, regulators and different stakeholders. Other than sharing the most recent developments in Hong Kong after the pandemic, I launched methods to attach with international alternatives. A working example was the institutional traders and enterprises within the Center East. Whereas they’ve a lot to find out about Hong Kong, shoppers in Hong Kong are eager to discover funding alternatives within the Center East.

The restoration in journey has been speedy. In keeping with the Hong Kong Tourism Board, the variety of guests to Hong Kong within the first two months of this yr exceeded 4 million, a year-on-year improve of greater than 380 instances, with greater than 70 per cent of them coming from mainland China. Whereas the expansion charge is spectacular, there’s nonetheless a protracted approach to go to return to pre-pandemic ranges.

Nonetheless, I stay optimistic concerning the outlook. It’s my conviction that financial exercise will choose up steadily, enabling Hong Kong’s economic system to get better healthily. From the Hong Kong Artwork Month in March and the Wealth for Good in Hong Kong summit, to the Hong Kong Sevens, and the scheduled opening of the Kai Tak Sports activities Park in 2024, the delicate energy of tradition and sport is crucial to Hong Kong’s place as a global monetary hub.

Hong Kong’s energy as a worldwide monetary centre is greatest demonstrated by its position within the reform and opening up of China’s economic system. For greater than 40 years, Hong Kong has been serving to enterprises and traders in mainland China to “go international”. This yr marks the thirtieth anniversary of the itemizing of state-owned enterprises (SOEs, H-shares) in Hong Kong, for the aim of assembly their financing wants via Hong Kong’s worldwide capital market.

Enterprises additionally needed to reinforce company governance and align with worldwide requirements. Presently, H-shares account for 12 per cent of the Hong Kong inventory market. When H-shares, pink chips and personal enterprises are all included, mainland enterprises account for 76.5 per cent of the market capitalisation and 87.4 per cent of the turnover of Hong Kong inventory market. That is strong proof of Hong Kong’s skill to attach mainland China with the world. With the emergence of expertise start-ups in mainland China, it’s anticipated that they may play as dominant a job as SOEs do at this time.

I’m honoured to have participated within the opening up of mainland China’s capital markets. HSBC, for instance, grew to become a Certified International Institutional Investor (QFII) 20 years in the past, and has promoted the internationalisation of Renminbi (RMB) and took part within the first mutual entry initiative – the Shanghai-Hong Kong Inventory Join. Launched 9 years in the past, the initiative has now been expanded to incorporate bonds, trade traded funds (ETFs), monetary merchandise and danger administration instruments (the upcoming Swap Join). It’s anticipated that each funding quotas and asset lessons will regularly be expanded sooner or later, diversifying funding portfolios of mainland enterprises and people, in addition to worldwide traders.

Given the scale of the Chinese language market, it has not been straightforward to take it from close to full closure to gradual opening and internationalisation. Throughout this course of, Hong Kong has change into the world’s largest offshore RMB centre.