HK maintains sustainable growth of financial market: official

Stability, quality and market development are three pillars to maintain Hong Kong as one of the most resilient and stable financial markets in the world, said Frederick Ma, secretary for Hong Kong's Financial Services and the Treasure, on Thursday.

Delivering a keynote speech at the Asian Banker Summit 2004, Masaid that to ensure sustainable growth, it is most important to get the fundamentals right, and at the same time to be flexible enough to tap market opportunities.

Hong Kong has managed to maintain a high degree of banking stability without a single case of bank failure despite a collapse in property prices of nearly 70 percent within a period of five years, not to mention all the various shocks that Hong Kong economy has encountered, said Ma.

Though the primary function of banks is still to recycle capital from savers to borrowers, banks' risk-management systems have become far more sophisticated than before. The growth over the past decade of market instruments for spreading risk among institutions has been remarkable, with the development of credit derivatives probably the most impressive, he said.

A sound and healthy banking sector is in fact the very foundation of a flourishing economy. And in turn, a stable, open and competitive investment environment plus a well-developed financial market help create unlimited opportunities for the banking industry, said Ma.

He pointed out that the full implementation of China's mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) on Jan. 1, 2004 offers great market access and flexibility for Hong Kong's financial services suppliers and professionals to conduct business in the mainland.

For the banking sector, CEPA has substantially lowered the asset requirement, from 20 billion US dollars to 6 billion US dollars, for Hong Kong banks to set up branches in the mainland. Operational and profit assessment requirements have also been relaxed for Hong Kong banks. The concessions have added a significant comparative advantage to our local banks.

Meanwhile, the scheme for providing personal renminbi business has been launched in Hong Kong by the local banks. The scope of business includes renminbi deposit, remittance, exchange and renminbi bank card business for individuals in Hong Kong.

The scheme has greatly facilitated the visits of people between the mainland and Hong Kong, and has provided a new channel for the flow of renminbi funds between the two places through the banking system, Ma added.

Source: Xinhua