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Promoting Financial Co-operation between Hong Kong and the Mainland, Reinforcing Our Status as an International Financial Centre

25.      Hong Kong is an international financial centre and also a platform for the Mainland with the rest of the world. We are committed to reinforcing this status and further enhancing our role as the premier capital formation centre for China. The biggest advantage of our financial market lies in its quality. On listing in Hong Kong, enterprises from the Mainland and elsewhere not only secure the capital they need but also achieve recognition as being up to international listing standards. As at the end of February this year, there were more than 260 Mainland enterprises listed in Hong Kong, with a total market capitalisation of nearly $1,900 billion. The total amount of capital raised by these enterprises in Hong Kong exceeds $790 billion.

26.      To keep pace with market development, we will continue to improve our regulatory framework. One of our major tasks is to enhance our corporate governance to keep it in line with international standards. We have, together with the Securities and Futures Commission (SFC) and Hong Kong Exchanges and Clearing Limited (HKEx), implemented a number of measures towards this end. We will continue to implement the other measures outlined in our Corporate Governance Action Plan together with proposals for strengthening the supervision of auditors and raising the quality of financial reporting.

27.      The Government has completed its consultation on enhancing the regulation of listing. From this, there is general support for expanding the existing "dual filing" system and giving statutory backing to major requirements for listing. We are discussing the relevant details and implementation timetable with SFC and HKEx. We will announce by the end of this month the consultation conclusions and the road map for implementing the recommended improvements. We expect to introduce the relevant legislative amendments early next year.

28.      The CPG has agreed to banks in Hong Kong conducting RMB business. This represents not only a breakthrough in the development of our banking industry, but also an important milestone for financial co-operation between the Mainland and Hong Kong and our economic development. At present, 35 banks in Hong Kong are providing RMB deposit-taking, exchange and remittance services. Total RMB deposits in Hong Kong exceed RMB 2 billion. The value of transactions by Mainland visitors using RMB cards averages $2.6 million a day and is on the rise. We will continue discussions with the Mainland authorities with a view to expanding the scope of RMB business once it has established a firm foundation here.

29.      The Chief Executive announced in this year's Policy Address that the Government would strive to develop Hong Kong as a world-class asset management centre. We are exploring, through the Advisory Committee on Human Resources Development in the Financial Services Sector, ways of encouraging the sector to work with tertiary institutions to strengthen the training of local talent so as to enhance the competitiveness of Hong Kong as an international asset management centre. We will continue to improve our regulatory legislation and systems so as to provide a more favourable market environment for the launch of new investment products and the access of international funds to the local market. We are also in discussion with the industry on the detailed arrangements and the necessary legislative amendments to exempt offshore funds from profits tax.

30.      Although our banking system and securities market are well established, we lack a mature bond market. Currently, the total outstanding amount of bonds in Hong Kong is equivalent to only about 45 per cent of our GDP, whereas in developed countries such as the US and Japan, the rate is as high as 150 per cent. To reinforce Hong Kong's position as an international financial centre, we must redouble our efforts to develop the bond market, offering diversified investment products and avenues for financing to attract more overseas capital and enhance overall financial stability.

31.      The Government has achieved much in this respect, including provision of the necessary financial infrastructure, a simplified issuance process and tax incentives. To promote the further development of our bond market, we need to expand its size, product range and liquidity. Apart from expanding the avenues for retail issues, the Government will continue to encourage public corporations to issue bonds and will itself issue different types of instruments such as securitisation and government bonds. This will offer investors more choice and promote the development of the local bond market. Later, I will go into more detail concerning our plans to issue government bonds.

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2003 | Important notices
Last revision date : 10 March, 2004