2nd April 2024 – (Hong Kong) In an increasingly interconnected world where economic ties transcend borders, Hong Kong stands apart as a truly unique international nexus. As the world’s most pivotal financial gateway between East and West, the city seamlessly integrates the complementary strengths of mainland China and the global markets. This strategic positioning, underpinned by the “One Country, Two Systems” principle, has solidified Hong Kong’s status as an indispensable conduit for capital, opportunity, and innovation.

At the core of Hong Kong’s competitive edge lies its privileged access to the burgeoning mainland Chinese market coupled with a world-class legal system and an unwavering commitment to free flows of capital, goods, services, and talent. As Yang Lishan, a leading expert on Hong Kong’s financial landscape, aptly noted, “Hong Kong enjoys the remarkable advantage of the ‘One Country, Two Systems’ framework, bolstered by the Chinese government’s steadfast support.” This unique model positions the city as a testing ground for China’s gradual financial market liberalisation and the internationalisation of the renminbi, whilst concurrently maintaining its global financial centre credentials.

Hong Kong’s multifaceted role as Asia’s largest international asset management hub, the primary cross-border private wealth management centre, a premier hedge fund hub, and the second-largest private equity fund centre is a testament to its unrivalled appeal. The city has emerged as a magnet for domestic and international funds, companies, and opportunities, serving as an unparalleled investment and financing platform that bridges mainland China with the rest of the world.

The International Monetary Fund (IMF), in its comprehensive assessment report issued in May 2023, resoundingly affirmed Hong Kong’s standing as a major international financial centre. The report lauded the city’s robust institutional framework, ample capital and liquidity buffers, and stringent regulatory standards within the financial industry, commending the seamless operation of the linked exchange rate system.

From a policy perspective, Financial Secretary Paul Chan has emphasised a dual-pronged approach – injecting confidence into the market through short-term measures while propelling high-quality development over the medium to long term. Immediate initiatives encompass removing demand-side constraints, such as the recent withdrawal of property market cooling measures, enhancing stock market liquidity, stimulating inbound tourism, bolstering consumption, organising major events, and supporting small and medium-sized enterprises’ liquidity, business development, and digital transformation. Concurrently, the medium to long-term strategies prioritise fostering green and sustainable development, nurturing the digital economy, and cementing Hong Kong’s status as one of the eight major global centres.

As Hong Kong gradually returns to normalcy, the city is hosting a myriad of world-class financial events that showcase its inherent advantages, development potential, and investment opportunities. The International Financial Leaders Investment Summit, which convenes over 300 global financial institution heads, a high-level conference co-organised by the Hong Kong Monetary Authority and the Bank for International Settlements, the prestigious UBS Hong Kong Family Office Summit, and the Global Investment Summit organised by the Milken Institute are among the marquee gatherings gracing the city’s calendar.

Complementing these financial powerhouse events are several large-scale extravaganzas spanning fashion, sports, and art, slated to take place from 22nd March to 7th April. These illustrious affairs will attract participants from diverse sectors worldwide, fostering abundant business opportunities while showcasing Hong Kong’s unparalleled vibrancy and charm on the global stage.

These financial events serve as platforms for spotlighting Hong Kong’s prowess as an international financial centre, its immense development potential, and the wealth of investment prospects it offers. By drawing affluent individuals, investors, entrepreneurs, and innovators from across the globe, Hong Kong can catalyse cross-industry and cross-sector collaborations, attract capital inflows, and solidify its position as a premier hub for asset and wealth management. Moreover, these gatherings enable Hong Kong to maintain a pulse on market trends, introduce novel products and services, and fortify its competitive edge. Acting as a “super-connector” and catalyst for value creation, Hong Kong seamlessly links investors and capital markets from both mainland China and the world, contributing to the economic prosperity of the nation and the region.

This pivotal role was further underscored by Hong Kong’s fourth-place global ranking in the highly regarded Global Financial Centres Index (GFCI) 35 Report, published today by the esteemed Z/Yen Group from the United Kingdom and the China Development Institute from Shenzhen.

Responding to the report, a government spokesperson affirmed, “Under the ‘one country, two systems’ principle, Hong Kong enjoys the unique advantages of being backed by the motherland and connected to the world. Hong Kong has been striving to align with the national development strategies and serve as an important node in the domestic and international dual circulation of our country through proactively integrating into the national development of the reform and opening up of the financial market, while maintaining the internationalised nature of our market and playing the role as the gateway between the Mainland and the world.”

Reflecting this commitment, the 2024-25 Budget has unveiled a series of policy initiatives aimed at better harmonising ‘capable government’ with ‘efficient market’ to propel Hong Kong’s financial markets to unprecedented heights. These measures encompass enhancing the city’s offshore renminbi (RMB) market by increasing liquidity, promoting offshore RMB product development, and improving financial infrastructure like the Central Moneymarkets Unit. Additionally, efforts are underway to collaborate with mainland authorities to accelerate mutual market access initiatives, including the issuance of Mainland government bond futures, the inclusion of RMB counters under the Southbound Trading of Stock Connect, and the expansion of international enterprises eligible for Southbound Trading.

Furthermore, by waiving stamp duties on the transfer of real estate investment trust (REIT) units and enhancing preferential tax regimes for related funds, single-family offices, and carried interest, Hong Kong is fortifying its position as the preferred asset and wealth management hub for international investors.

Highlighting Hong Kong’s ascendancy in asset and wealth management, a recent Market Study on the Family Office Landscape in Hong Kong, conducted by Deloitte and commissioned by Invest Hong Kong, revealed the presence of over 2,700 single-family offices in the city. This market study sheds light on the flourishing development of the family office sector in Hong Kong, reaffirming the city’s status as one of Asia’s preeminent asset and wealth management centres.

Hong Kong also recently hosted the illustrious Financial Mega Event Week Highlights include the highly acclaimed Wealth for Good in Hong Kong Summit exclusively for family offices, the inaugural One Earth Summit organised by the Institute of Sustainability and Technology and co-organised by the Giving to Amplify Earth Action (GAEA), a World Economic Forum initiative, on global climate and the green economy, and the Global Investors’ Symposium organised by the Milken Institute – the Institute’s first large-scale summit held in Hong Kong since 1998.

As the world navigates an era of profound transformation, Hong Kong’s well-established playbook as a leading international finance centre has served it well. The city’s competitive and low tax structures, free flow of capital, access to the Greater Bay Area (GBA), and fair and effective markets have nurtured a thriving ecosystem of around 1,000 fintech companies.

However, we are also bearing witness to a critical convergence of market forces shaping the future of finance. The transition to Web3, the rapid advancement of frontier technologies, economic bifurcation, the burgeoning demand for green finance, and the formation of novel economic partnerships are among the defining trends that necessitate an evolution of Hong Kong’s strategic approach.

Hong Kong’s pivotal decision to forge ahead with developing the virtual assets sector, even in the wake of the FTX collapse, exemplifies the city’s forward-thinking and long-term resolve. At a juncture when trust in Web3 and virtual assets was waning, Hong Kong remained steadfast in its commitment to nurture this burgeoning space, guided by principles of fostering stable and orderly growth. This progressive stance towards virtual assets has signalled to the world that Hong Kong is prepared to take the necessary steps to pioneer and maintain its status as an international financial hub.

Since the groundbreaking virtual assets policy announcements during the 2021 Hong Kong FinTech Week, the city has emerged as a magnet for Web3 and virtual asset companies, as well as renowned industry events. Financial institutions have accelerated their exploration of Central Bank Digital Currencies and the tokenisation of real-world assets. Banks are providing services to virtual asset companies, and new funds have emerged to invest in the development of Web3. Aligning with the city’s commitment, the Government has not only established a Task Force in June 2023 to promote Web3 development but has also actively engaged with prominent international conferences.

Aligning with the city’s commitment, the Government has not only established a Task Force in June 2023 to promote Web3 development but has also actively engaged with prominent international conferences, aiming to transform Hong Kong into a thriving hub for the Web3 and blockchain community. These initiatives represent a significant stride in the city’s pursuit to establish itself as the premier Asian Web3 Hub.

Several projects are already bearing fruit. These include the HKSAR Government’s successful offering of around HK$6 billion worth of digital green bonds denominated in multiple currencies under the Government Green Bond Programme; Arta Techfin, which is pioneering tokenised funds supported by Chainlink’s cross-chain interoperable infrastructure; HashKey, which is creating a Web3 renewable data energy network to support green finance; as well as OSL’s recent announcement of the first investment-grade tokenised warrant jointly with UBS AG, demonstrating a vibrant development in the Web3 ecosystem.

Beyond Hong Kong’s shores, the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) presents one of the fastest-growing economic opportunities in Asia. However, it is crucial to recognise that Hong Kong’s long-held strategic position as a gateway to the GBA is being extended further into high-potential markets, particularly the Middle East. We are witnessing the emergence of a new ‘Golden Age’ where Hong Kong is not only the city where East meets West but is a natural convergence point where East meets Middle East. In a world where new economic alliances and partnerships are forming, this must become an integral part of Hong Kong’s playbook.

Delegations to the Middle East to foster business opportunities and investment are yielding tangible results. Start-ups are signing deals to scale into the region, the Hong Kong Stock Exchange has secured an agreement with the Saudi Tadawul Group to bring the two financial markets closer, and a flagship Saudi-China entrepreneurs guild will be established in the city. Moreover, InvestHK recently entered into a Memorandum of Understanding with the Ministry of Investment of Saudi Arabia (MISA) to foster cooperation in investment promotion.

To navigate the future of finance and the global economy, we must embrace frontier technologies such as artificial intelligence and blockchain. Proximity to their development is crucial for our financial and fintech sectors to maintain a competitive edge.

Hong Kong’s innovation and technology sector has witnessed remarkable growth. The government’s InnoHK scheme has attracted top talent from around the world, driving collaboration with local universities in cutting-edge fields. Initiatives like GSBN, utilising blockchain to transform the shipping industry, further solidify Hong Kong’s position as a global hub for innovation and trade.

We must recognise that the core innovation emanating from entities like the Hong Kong Science and Technology Parks and the growing venture capital community is critical to the success of our finance sector. It is time to integrate these two pillars and unlock the full potential of Hong Kong’s financial ecosystem.

Today, the world is changing, merging, and shaping at every turn. New forces are redefining financial services and fintech as we know them. Hong Kong finds itself at the heart of this redefinition, where new models are being created, rules for a new world are being shaped, and frontier technologies are generating novel opportunities. This presents an opportunity for Hong Kong to reclaim its core identity of standing out for its true pioneering and entrepreneurial spirit. This is the playbook for Hong Kong’s future as an international finance and fintech centre.

In a world where global interconnectivity is imperative for success, Hong Kong stands apart as the sole city that seamlessly bridges the complementary strengths of China and the international community. Since its return to Chinese sovereignty, Hong Kong has leveraged the “One Country, Two Systems” framework to position itself as a gateway to the mainland market, a testing ground for the gradual opening of China’s financial sector, and a frontier for the internationalisation of the renminbi. Hong Kong’s connectivity with the mainland continues to expand, encompassing bonds, ETFs, and derivatives. Simultaneously, as an international financial centre, Hong Kong maintains its own legal system, allowing for the free flow of talent, goods, and capital.

This unparalleled status has been reaffirmed time and again by esteemed global bodies and industry experts. Hong Kong’s robustness as a leading financial hub rests upon its unique competitive advantages, world-class regulatory environment, and the Chinese government’s unwavering support.

As Hong Kong emerges from the pandemic, it is poised to host a myriad of prestigious financial events that will showcase its inherent strengths, untapped potential, and compelling investment prospects to the world. These gatherings will serve as platforms for fostering cross-industry collaborations, attracting capital inflows, and solidifying Hong Kong’s position as a premier asset and wealth management hub. However, to secure its future pre-eminence, Hong Kong must evolve its playbook to meet the emerging forces reshaping the global financial landscape. The city’s prescient embrace of Web3 and virtual assets, even amidst industry turmoil, exemplifies its forward-thinking approach and commitment to maintaining its status as an international financial hub.