Speech by FS at Hong Kong Investment Funds Association 19th Annual Conference (English just) (with photos/video)
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Following is the speech by the Financial Secretary, Mr Paul Chan, at the Hong Kong Investment Funds Association (HKIFA) 19th Annual Conference today (June 22):
Sam (Chairman of the HKIFA, Mr Sam Yu), Kelvin (Chairman of the Securities and Futures Commission, Dr Kelvin Wong), differentiated visitors, girls and gentlemen,
Excellent early morning. It is an enjoyment to join you at the Annual Conference of the Hong Kong Investment Funds Association – and what an unique celebration it is, as we commemorate the Association’s 40th anniversary. My sincere congratulations.
Forty years earlier, the creators of this Association came together with an easy function: to offer this market a cumulative voice, shared requirements, and a platform to engage with regulators. 4 years on, that function has actually been more than satisfied. The HKIFA has actually become among the most reputable market bodies in the area, and the market it represents has actually grown with it – from a regional market to a worldwide center for cross-border capital.
International capital allotment is going through a basic adjustment, and this center is where the circulations are assembling. In my discussions with financiers worldwide over the previous 2 years, I have actually noticed a significant modification: not simple optimism or pessimism, however an organized reassessment. Lots of organizations have actually acknowledged that their allotment to this area has actually long been low. At the very same time, China’s leading innovation business are accelerating their combination into international market supply chains and commercial bases, producing genuine and significant need for worldwide capital.
The merging of these 2 forces has actually positioned Hong Kong in an extraordinary position. We should be honest: This position was not driven by external elements alone. It rests on the institutional structures Hong Kong has actually developed over years – the typical law system, a globally appreciated regulative structure, and expert market intermediaries – all running within a constitutional structure that maintains our unique function, plus the unfaltering assistance of the Central Authorities. In this fast-changing environment, the world is delegating us with a brand-new job, and our obligation is to show ourselves deserving of it.
The marketplaces have actually currently cast their vote. In 2015, net fund inflows to Hong Kong-domiciled funds reached some $350 billion, and the momentum has actually brought into the very first quarter of this year, with almost $100 billion more. When the Securities and Futures Commission releases its most current study in July, I am positive we will see another motivating set of numbers.
These numbers show something essential. Hong Kong is no longer merely a market for worldwide capital to go through. We are becoming their relied on steward. What market conditions must exist for international financiers to continue to increase their allotments here?
The response covers numerous measurements. The breadth and depth of financial investment items. Over the previous 2 years, the variety of exchange-traded items (ETPs) noted in Hong Kong has actually grown from less than 180 to more than 240, with properties under management approaching $650 billion, positioning us securely amongst the world’s leading 3 ETF markets. Numerous of these items even rank as the biggest of their kind internationally. This is not simply mathematical development; it suggests worldwide financiers can now assign to gold, innovation, cross-border indices, and even digital properties through Hong Kong, at a lower threat premium.
Second, the dependability and performance of monetary facilities. We are advancing the facility of an International Central Securities Depository that supports multi-asset custody, cross-collateralisation and cross-border settlement. The significance of this work lies not in the innovation itself, however likewise in the effectiveness of capital release that it will make it possible for.
We likewise presented a number of legal modifications over the previous couple of years to even more boost the competitiveness of our fund programs, with generous tax concessions. I hope you would make excellent usage of it.
Third, the ongoing deepening of connection. We have actually developed cooperation with 20 exchanges worldwide, and are broadening double listings and cross-border item offerings with more jurisdictions. Every transfer to work together minimizes the institutional friction of cross-border capital allowance. We likewise spare no efforts in boosting existing link plans. As revealed last week, with the assistance of the Central Authorities, treasury bond futures will be introduced in August, matching Bond Connect and Swap Connect to form a more total risk-management toolkit for RMB properties. These plans are created to offer worldwide financiers hedging and pricing alternatives when assigning capital to RMB properties.
Individually, the worldwide reassessment of China’s technological abilities is not simply an evaluation change; it is a cognitive reframing. Worldwide financiers begin to comprehend more China’s development community, and Hong Kong, with its global connection and familiarity with the advancements on the Mainland, is distinctively placed to supply that connection function.
This special connection is most strongly manifested in the Greater Bay Area. This area integrates frontier research study, plentiful application circumstances, advanced production, and a global capital market. Such a mix is unusual throughout the world. Hong Kong’s function is to function as the expert intermediary in between this environment and international capital.
And our function is not simply a platform for them to raise funds for their worldwide growth, however likewise to assist them align their business governance with worldwide requirements and finest practices, gain higher acknowledgment from financiers and boost their international exposure.
Ladies and gentlemen, as we widen our item offerings, boost our facilities, deepen our connection, and mobilise capital to support technology development, we remain in truth doing something: constructing a reputable bridge in between worldwide capital and Chinese technological development. The worth of this bridge is eventually not determined simply by the size or ranking of our market, however by something more basic – trust.
That trust rests on a judiciary working out powers separately, transparent policies, and expert intermediaries that financiers depend on when they pick Hong Kong. In picking Hong Kong, they are not simply picking a market by geographical area; they are selecting a set of foreseeable behavioural requirements. And it is the everyday practice of those requirements – in every item you note, every allotment you suggest, every job you dedicate to – that will specify this market’s future.
That future started 40 years back, when the creators developed this Association to represent the market. Today, you can be happy with the self-confidence you have actually motivated. I rely on that the proficiency, professionalism and stability you give your work will continue to form Hong Kong’s position in the worldwide monetary system.
On this crucial turning point, I when again praise the Hong Kong Investment Funds Association on 40 amazing years. I want you continued success in much more years ahead. Have a satisfying and productive conference. Thank you.