HK can Become China and Asia's Bond Center: BOC

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Last updated at: (Beijing Time) Tuesday, October 01, 2002

HK can Become China and Asia's Bond Center: BOC

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The Bank of China says in its monthly Economic Review that Hong Kong Special Administrative Region (HKSAR) has the potential to be a bond issuing center for China and the whole of Asia by attracting bond listings from the mainland and overseas countries.

The remarks were made in the September 2002 Economic Review published by the Bank of China Hong Kong Limited.

Hong Kong's Central Monetary Unit will soon be capable of handling the US dollar, the Europe and Yen bonds, making Hong Kong the ideal place to help raise foreign debts for the Chinese government and corporations, it said.

"A natural step to take in developing HKSAR's bond market is to expand China related market. Development efforts should be focused on three fronts: to continue to develop local Hong Kong dollar bond market, to expand the mainland bond market and to compete for regional bond businesses," it said.

Once China completely opens its financial market and the Renminbi becomes a super-regional currency, the full potential of China's bond market can be mobilized. In the area of infrastructure, for example, Hong Kong can leverage its advanced knowledge and help build the infrastructure on the mainland, seeking to link up the two systems during the process, it said.

"Once the RMB market opens up, Hong Kong should position itself as the offshore center for the RMB for the RMB bond issuing, trading, clearing and settlement. And more businesses can be gained on debt derivatives, designing, trading, clearing and settlement," the report said.

To make Hong Kong Asia's bond center, "initiatives should be taken on both reaching regional cooperation agreements between foreign governments and bring issuers and investors to Hong Kong,"it said.

Corporations in the region and overseas entering the China market should be targeted for their bond issuing businesses. With Hong Kong's state of the art infrastructure, perseverance will see our efforts through, "it said.

Earlier, Joseph Yam, the chief executive of the Hong Kong Monetary Authority said as the international business community has been positioning itself after China's entry into the World Trade Organization, the HKSAR, being a free and open economy at the doorstep of the mainland and an integral part of China, should make use of the many opportunities that will open up in the years to come.

Statistics showed that newly issued Hong Kong dollar debt securities reached 385.8 billion Hong Kong dollars (49.4 billion US dollars) in 2001, and outstanding debt securities reached 530.8billion Hong Kong dollars (68.1 billion US dollars).

Hong Kong's bond market is rated the second largest in Asia behind Japan.

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