The Hong Kong Special Administrative Region should take the initiative to tap into emerging markets, promoting its financial products and attracting capital to rekindle its economic prowess, said board members of the Financial Services Development Council (FSDC) on Friday.
“Hong Kong stands on the cusp of yet another global transformation. ... (It) will evolve from a bridge to a ‘superconnector’ by linking North, East, South and West, rather than just East and West,” said Laurence Li Lu-jen, chairman of the council, at a press conference detailing the government advisory body’s annual report.
In the past year, the FSDC signed agreements with financial bodies in Luxembourg and Saudi Arabia. It also forged partnerships in Qatar and on the Chinese mainland.
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Li said the council will strengthen these ties and seek connections with Eastern Europe and Latin America.
He noted Hong Kong’s true role is the connector in the “dual circulation” strategy, a long-term economic development strategy sketched out by the central government. This pattern highlights the Chinese mainland’s domestic market as the mainstay, with domestic and international markets reinforcing each other.
To fortify this role, Hong Kong should assist in driving the adoption of the renminbi in both jurisdictions to entrench its status as an international financial hub, Li said.
Vice-chairman of the council Andrew Weir agreed with Li. He highlighted the importance of the renminbi in Hong Kong’s financial position on the global stage.
Vice-chairman of the council Daniel Fung struck an upbeat tone on Hong Kong’s IPO market amid the city’s efforts to explore emerging economies.
“Hong Kong’s stock market is set to diversify its listing (sources) beyond the mainland,” Fung said.
“Our country is the biggest consumer of natural resources in the world, ranging from oil and gas to precious metals. ... Therefore, I think we can expect to see listings ... from places which supply natural resources to China, seeking to take advantage of Hong Kong’s very mature capital raising and listing platform,” he added.
Fung said he expected the trend to gain momentum “in the coming months and years”.
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He also mentioned that the council will carry out research on Islamic finance, referring to financial practice following Sharia, or Islamic law.
Ernst & Young reported last month that Hong Kong IPO fundraising amount sunk 32 percent year-on-year in the first half of 2024, with 28 companies raising HK$12.1 billion ($1.5 billion) as of June 12.
However, the global accounting firm predicted that the city’s capital market is set to turn around over the next five years, with a strong pipeline for the second half of the year amid an expected interest rate cut by the US Federal Reserve and the Hong Kong government’s supportive measures to boost the market.
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