There were times when the world wrote-off Hong Kong of ever returning as a financial hub in this region, news of corporations fleeing and its international banking status collapsing was rife. However the island has withstood multiple circumstances and its financial market stability underpins its position as an international financial center even when the world’s major financial markets were experiencing economic shocks from the COVID-19 pandemic.
Eddi Yue, Chief Executive of the Hong Kong Monetary Authority (HKMA),”When the financial sector expressed concerns, financial secretary of the Hong Kong Special Administrative Region (HKSAR) government and the HKMA clarified doubts and reaffirmed the advantages of ‘one country, two systems,'” Yue said in an interview with Xinhua.
According to the Hong Kong Exchanges and Clearing Limited (HKEX), 154 companies went public in Hong Kong in 2020, raising 397.5 billion HK dollars (about 51.19 billion U.S. dollars) in initial public offerings (IPOs), the highest figure since 2010. This reflected investors’ confidence on Hong Kong as a strategic spot for financial institutions and being close to the fastest growing economy in the world. The trade war which kicked off between China and the US during the Trump administration, has been on suspension mode until Joe Biden comes to the table to renegotiate. Having already endured the most, China looks unperturbed as shown in its economic data and gross domestic product.
“If the world’s major central banks tighten their loose monetary and fiscal stimulus policies, Hong Kong will properly manage the risk of funds leaving the Asian market,” Yue said, adding that Hong Kong’s financial markets could cope with any changes in the so-called U.S. sanctions.
China is the main contributor to Hong Kong’s stability, the cross-boundary stock trading link between the two is now in full swing, in 2020, the average daily turnover of Stock Connect northbound trading rose 119 percent and that of southbound up by 128 percent.
In today’s low-interest environment, it seems international investors favor China’s economic development and have a strong interest in Chinese investment products. This bodes well for Hong Kong which provides convenience for international investors by connecting the mainland with the international market.
Apart from that the Guangdong-Hong Kong-Macao Greater Bay Area is also a good experimental site for financial connectivity between Hong Kong and the mainland, and more cross-boundary financial measures are expected to be introduced this year.
Hong Kong has managed its Covid-19 battle pretty well, the containment has been effective and with China helping out in the quarantine know-how the outbreaks were managed very effectively. And now with vaccination being rolled out, the island is gearing up for a quick recovery and will focus on new growth sectors. On this front HKMA identifies fintech and green finance being the general trend and has already made plans in these areas.
With regard to the green finance, it will conduct financial climate change stress test on the banking system in the future, and will set up a platform for personnel training and data sharing. Hong Kong will also greatly increase the issuance scale of green bonds in coming months.