A study released recently by Hong Kong Trade Development Council (TDC) shows ample opportunities for financial institutions to capitalize on Hong Kong's unique position vis-a-vis the Chinese mainland.

According to the report, a total of over 570,000 private enterprises set up in the mainland during 2003, or around 1,500 enterprises established per day.

"Mainland enterprises need an enormous amount of capital (foreign and domestic) and financial services to meet their aspiration for expansion. But financial markets in the mainland are not fully developed to meet their rising demand," said TDC's Chief Economist Edward Leung.

The report says Hong Kong can meet most of mainland enterprises ' financial needs, including most importantly providing state-owned and private enterprises and high-tech companies with funds and liquidity. Hong Kong is widely recognized as a fund-raising center for firms with operations in the region.

Listing on the Hong Kong Stock Exchange opens the door to easier access to international investors who attach great importance to Hong Kong's renowned "Mainland" expertise.

Over 90 percent of the overseas listed mainland companies have their listings in Hong Kong. In the past ten years, 80 percent of the funds raised by mainland companies in Hong Kong has been brought in via post-listing issues. This demonstrates the ample liquidity of Hong Kong's capital market.

Venture capital is another important source of funding for the mainland's smaller private enterprises, and a vital way of nurturing the development of "high and new technology" industries -a top policy goal of the Central government.

The mainland's venture capital industry is still in its infancy and its funds are relatively small in size. Hong Kong has the largest pool of capital for private equity investment in the Asia Pacific region. The report adds that Hong Kong's venture investors provide not only funds but also the know-how of financing, modern management skills and international marketing strategies, expertise that mainland enterprises lack.

The TDC survey points out that Hong Kong's financial experts and related professionals can help "shorten the mainland's learning curve" in its attempts to further integrate with the global financial market.

TDC's Chief Economist said: "Hong Kong can help the mainland to develop a regulatory regime and framework that is compatible with global standards. This will include regulatory methodology, a high standard of corporate governance, transparency and disclosure practices.

Source: Xinhua