Hong Kong must 'embrace and facilitate' movement of global firms to city, says finance chief Paul Chan

Hong Kong's place as one of the world's top financial hubs is based not only on its ready access to mainland capital and as the home ground for many Chinese firms, but also due its attractiveness for international firms and new economy businesses. This was a key message from Hong Kong's Financial Secretary Paul Chan Mo-po during a keynote address in a Post-organised forum in Singapore on Wednesday.

While it was important for Hong Kong to continue to serve as the mainland's international financial centre, it needed to "embrace and facilitate" the movement of global firms to the city too, he said at the China Conference: Southeast Asia 2023.

Mainland firms currently make up about 75 per cent of Hong Kong's market capitalisation and contribute nearly 80 per cent of the daily turnover.

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The "favourable" move by the China Securities Regulatory Commission to allow international firms to be eligible for the Southbound Bond Connect - a mutual market access scheme that lets mainland institutional investors invest in Hong Kong - made the city more attractive to overseas firms, Chan said.

"With this policy, we are in the best position to do more to enable these companies to come," he said, adding that the city could also improve itself in embracing new economy firms.

The city's financial tsar also referenced the Hong Kong Stock Exchange's announcement last week to allow eligible specialist technology companies to apply to list at the pre-commercial or early commercial stage starting from March 31.

"Companies involved in deep research, naturally for many of them, they would not be able to generate profit or even revenue in the earlier stage," he said. Allowing these firms to list - on fulfilling certain requirements - would enable them to gain access to much-needed funding, he said.

Chan also emphasised that Hong Kong could become a regional hub for green technology and finance.

Hong Kong is already home to a burgeoning list of green tech firms and it issued its first tokenised government green bonds - the first of their kind in the world - in February, he said.

The city was also Asia's top issuer of green and sustainable debts last year, raising US$80 billion.

"But our aspiration is much higher and bigger. We are determined to position ourselves as the centre of green tech and green finance," he said.

"Our vision is to bring together the green finance and green tech sectors so that they can form a symbiotic relationship, which will firmly support cycles of research and development, product commercialisation and mass production as well as a complete and vibrant industry chain."

To achieve that, Chan said Hong Kong would build its green technology ecosystem by attracting top enterprises and getting start-ups to set up shop in the city, and encouraging cross-sector collaboration to commercialise research and development.

He said it would also ramp up innovations in green financing, help firms get funds faster and easier, and nurture and attract talent from around the world. The government would also seek to enhance collaboration with the Greater Bay Area and countries in Southeast Asia.

Hong Kong also aims to push forward the development of fintech and Web3.

Chan pointed out that the city is home to 800 fintech companies and start-ups that offer a wide range of services from mobile payments to wealth management and virtual asset trading. "We were the pioneers in issuing virtual bank and virtual insurance company licences," he said, noting that there are now eight digital banks in the city.

Hong Kong was also collaborating with the mainland on the use of its digital renminbi for cross-boundary payments.

He called the Web3 sector an "important arena where financial innovation can harness enormous opportunities". "We actively embrace Web3," Chan added.

As the city emerged from the Covid-19 pandemic after three years of prolonged periods of lockdowns and strict border curbs, Chan also sought to sell Hong Kong to global investors.

"Hong Kong has now fully returned to normalcy. Once again, Hong Kong embraces the world and connects with our friends and partners in Asean and the Asia-Pacific," he told the conference, referring to the 10-member regional bloc.

Officials have in recent weeks made a bid to draw greater investments to the city to revive its economy, including new measures to entice more wealthy family offices.

On Wednesday, Chan stressed that Hong Kong was an international financial centre that had the advantages of a free-market economy, with access to China's massive market. It also maintains internationally recognised regulatory regimes.

"We have a deep pool of capital, talent and expertise ... The central government of China always lends full support to Hong Kong," he said.

Hong Kong would press ahead with the eight areas of development that the Chinese government had earlier set out for the city, including in the fields of international finance, trade, innovation and technology, he added.

To that end, Hong Kong would "leverage our synergies" with cities in the Greater Bay Area to "rise as the most competitive economic powerhouse", he added.

"In the short term, our focus is reinforcing and accelerating economic recovery. In the medium term, driving the economy towards high-quality development."

The Hong Kong official was also bullish about Asia's economic growth even as geopolitical tensions heightened and Western markets faced financial woes. Countries in the Gulf region are also actively looking to diversify their investments to Asia.

"Despite the rather gloomy global economic outlook elsewhere, Asia has remained a global economic powerhouse," he said. "In simple terms, to borrow the name of a book, the future is Asian."

Hong Kong, he said, could play a "unique role in contributing to the promising future of the Asian region together".

"We stand ready to share our knowledge, expertise and experience. We are delighted to collaborate with our partners from Asean, with our platform open and available to you all," he said.

Chan, who was in Singapore following a visit to neighbouring Malaysia, also held talks with Singapore's No 2 leader, Lawrence Wong, on Wednesday.

Writing on Facebook, the financial secretary said during his visit to Malaysia and Singapore he met representatives of family offices and tech companies who were confident about Hong Kong's prospects in the areas of digital economy, green technology and finance.

"They believe that the potential for development is unlimited, and they are interested in setting up or expanding their businesses in Hong Kong," he said.

This article originally appeared on the South China Morning Post (SCMP).

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