Hong Kong's International Financial Centre: Retrospect and Prospect

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As Hong Kong’s financial markets deepen, it is likely that the creation and trading of equity and other kinds of derivatives will increase. This will complement the strong contemporary performance of its equity market in the initial public offerings of Chinese companies. Based on the experience of other financial centres, especially New York and London, private equity placements, alternative investment vehicles, and other forms of wealth management will also very likely increase in importance. The fact that a rising number of nonresident investors are already looking to Hong Kong is especially suggestive of such a trend, since many resident investors are still recovering from their traumatic experience with Lehman mini-bonds. We discuss that matter more fully below. _________________________________________________________________________ Hong Kong’s Fund Management Business by Source of Investor Source: Securities and Futures Commission Data; HKMA, Working Paper 04/2008, Chart 31. _________________________________________________________________________ HKMA analysts currently project that Mainland firms and individuals will account for about 50% of the next decade’s growth in financial service exports. Together with domestic expansion, this will very likely propel total financial sector output from about 15% of GDP to over 20%, which would be comparable to the current situation in both New York and London. 15 Given increasing competition in this sector both regionally and globally, such a performance will depend upon Hong Kong firms moving rapidly up the chain of value. The quantity of business and the quality of business are very much related. What this translates into is the need to bolster the capacity for rapid emulation of advances made elsewhere and to accelerate the pace of local innovation, which brings us back to the quality of the labour force. Upgrading and supplementing that labour force is the key challenge in safeguarding and enhancing Hong Kong’s competitiveness in the years ahead. Again, it is a matter of investment, building, and restructuring—not least in the biggest driver of labour force quality, education. 15 Ibid., p. 29. 22
The legacy of past investments is already evident. In the financial sector, it is reflected in Hong Kong’s growing reputation among international investors, service professionals, and business managers. Whether that reputation continues to grow is a function of policy, the core issue to which we return after a deeper examination of the productivity of Hong Kong’s workforce. 23
Page 1 and 2: Hong Kong’s International Financi
Page 5 and 6: however, and widespread allegations
Page 9 and 10: 2. Analytical Background Foundation
Page 11 and 12: finance. 3 Not by coincidence is it
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Page 33 and 34: Both policy paths led to sound and
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Page 43 and 44: In this regard, it is entirely poss
Page 45 and 46: By 2010, 145 banks operated as lice
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Page 49 and 50: exceeded US$50 billion. With 78 com
Page 51 and 52: mismanaged. In the wake of the cris
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Page 57 and 58: insurers include AIA (Bermuda), Man
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Page 63 and 64: focus on the other financial policy
Page 65 and 66: their nominal value, depending on t
Page 67 and 68: contribute to dilemmas of various k
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Page 71 and 72: First, governments across the advan
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segmentation, slowed down but not s
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the vital importance of monetary st
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9. Finance, Autonomy, and the Achie
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they have always done so. For compe
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they collectively ‘solve’ the m
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policies. With such images and such
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such a context, the range of financ
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surveys of universities and their r
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Hong Kong's International Financial Centre: Retrospect and Prospect

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