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Published: 21:09, October 25, 2021 | Updated: 22:56, October 25, 2021
Lam: Hong Kong govt to enhance securities trading
By Wang Zhan in Hong Kong
Published:21:09, October 25, 2021 Updated:22:56, October 25, 2021 By Wang Zhan in Hong Kong

Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor speaks at the Hong Kong Association of Banks Distinguished Speaker Luncheon, Oct 25, 2021. (PHOTO / HKSAR GOVERNMENT)

Hong Kong has unparalleled promise as a global offshore renminbi business hub, Chief Executive Carrie Lam Cheng Yuet-ngor said on Monday.

The city’s leadership role in this is underlined by our total deposits, including certificates of deposit, she said detailing the financial services development efforts while delivering a speech at the Hong Kong Association of Banks Distinguished Speaker Luncheon.

“We are just getting going in promoting the two-way flow of cross-boundary renminbi funds and developing offshore renminbi products. In particular, we will look to allowing securities eligible for southbound trading under stock connect to be denominated in renminbi.”

Stock connect's southbound trading shows strong demand from mainland investors trading in securities listed in Hong Kong. They largely invest with renminbi, and would be a natural market for our renminbi-denominated stocks, said Lam.

ALSO READ: New connect in HK to lure more bond investors

Indeed, I would say that our strengths have become even more secure, now that "one country, two systems" is back on the right track.

Carrie Lam Cheng Yuet-ngor, Chief Executive, HKSAR 

Allowing southbound trading securities under stock connect to be denominated in renminbi could reduce mainland investors' exchange-rate risk by raising certainty in stock prices, she said, adding that she is expecting concrete proposals on this from a working group soon.

Hong Kong's rebounded economy is also providing a favorable backdrop for the banking industry. In the first half of 2021, real GDP (gross domestic product) shot up 7.8 percent year-on-year, she said. 

Hong Kong's rebound should not come as a surprise because our fundamental strengths remained intact during the challenging period, she said, identifying as key strengths the city’s low-tax regime, level playing field underpinned by the rule of law and an independent judiciary, together with highly open and internationalized markets, a deep liquidity pool, and the free flow of people, information and capital. 

“Indeed, I would say that our strengths have become even more secure, now that "one country, two systems" is back on the right track.”

Talking on the stability of the financial system, she said Hong Kong’s sound macro-prudential policies have provided the city with important buffers to cope with challenges in the past, and will certainly cushion future shocks.

Referring to the development plans for eight international centers in Hong Kong with support from central authorities under our nation's 14th Five-Year Plan, she said: “Leading the way is Hong Kong's role as an international financial center.”

The Greater Bay Area gives Hong Kong a seamless opportunity to take part in the nation's dual circulation strategy, presenting huge opportunities for Hong Kong's financial services sector, she said. 

READ MORE: Shenzhen municipal govt issues first offshore RMB bonds in HK

The government is working to develop Hong Kong as a regional carbon trading center and that includes supporting Hong Kong Exchange's plans to promote financial products related to carbon emission trading in co-operation with the Guangzhou Futures Exchange, she said. 

People stand in front of a bank's electronic board showing the Hong Kong share index at Hong Kong Stock Exchange in Hong Kong, Oct 25, 2021. (VINCENT YU / AP)

An MoU on linking up the People's Bank of China’s Fintech Innovation Regulatory Facility with the Hong Kong Monetary Authority’s Fintech Supervisory Sandbox seeks to provide a one-stop platform for financial institutions and technology companies to conduct pilot trials of cross-boundary fintech initiatives concurrently in Hong Kong and mainland Bay Area cities, she said.

Lam said the Monetary Authority is developing a Commercial Data Interchange to promote the digitalization of trade finance, “helping our SMEs gain the efficient export-financing support they need to compete in this 21st century of opportunity”. 

Saying that the success of this new feature lies in the receptiveness of the banks, she urged the association to play an instrumental role in promoting its application. 

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