Blog
Leveraging Our Financial Strengths to Promote High-quality Development
Technological innovation can drive leapfrogging development in the economy and industries, but this transformative momentum requires financial support and must leverage the power of finance. The research and development of cutting-edge technologies, as well as their transformation into practical applications, often take years—ranging from the incubation of ideas to the realisation of results, and then to sustained growth. This process is often complex and filled with challenges. Tech companies are often vulnerable during their startup and early growth phases. The key to unleashing financial power to support innovation and technology (I&T) development and building a thriving I&T ecosystem lies in the precise and efficient matching of capital with the risk appetites, investment focuses, and the liquidity needs of funders. By activating the front-end of the financial services chain, we can enable more private equity funds, venture capital funds, and long-term capital to better support startups, thereby injecting greater momentum into the development of Hong Kong’s I&T industries.
Last week, I attended the inaugural “Hong Kong Start-up Investment and Development Summit” (“the Summit”) organised by the Hong Kong Investment Corporation Limited (“HKIC”). The Summit attracted over 400 attendees and received enthusiastic response. Representatives from venture capital funds were optimistic about the development prospects in Hong Kong, highlighting the city’s unique institutional advantages and a vibrant I&T ecosystem. In essence, HKIC’s role as “patient capital” has attracted the attention and interest of more venture capital funds with similar goals. Furthermore, factors such as geopolitical considerations and the need to access international markets have led some promising startups to consider establishing themselves in Hong Kong. They aim to leverage Hong Kong as a platform that caters for their business in the Mainland while being connected to international markets. They also hope to make use of Hong Kong’s outstanding academic and basic research capabilities. It can be anticipated that Hong Kong's investment, industry, academia, and research ecosystem will become increasingly dynamic.
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Driving more concrete and impactful I&T development requires not only cutting-edge technologies but a young and entrepreneurial workforce. The Summit invited dozens of secondary school students to participate, giving them the opportunity to learn from entrepreneurs. We took selfies with students with a new model drone, hoping they will see how I&T can tangibly change lives and bring more fun. Vision is the stage for thought and the source of innovation. We hope that these learning experiences, exchanges and activities can ignite their aspirations for the future.
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| At the Summit on Start-up Investment and Development in Hong Kong, we took selfies with dozens of participating secondary students with a new model drone.
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| Speaking at the Summit on Start-up Investment and Development in Hong Kong last week. |
While innovation requires the support of financial services, the power of finance needs to be leveraged for accelerated infrastructure development. By issuing bonds of different types and tenors, we aim to channel funds seeking long-term and stable returns into a range of infrastructure projects, thereby expanding development capacity and promoting better overall economic growth.
Last week, the Government announced the upcoming issuance of retail Silver Bond, which will provide our senior residents with a low-risk, stable and reliable investment option. Considering the current interest rate environment and market conditions, including expectations that the United States Federal Reserve will initiate an easing cycle after its meeting this week, this batch of Silver Bond offers attractive conditions and arrangements, such as an interest rate linked to inflation with a guaranteed minimum of 4%. In fact, in this year’s Budget, we stated that $50 billion worth of retail Silver Bond and $20 billion worth of retail green bonds and infrastructure bonds would be issued in this financial year. In addition to making financial services more inclusive, this initiative will enhance our residents’ sense of “participation” and “benefit” from infrastructure and sustainable development projects. Details of the issuance of the remaining retail bonds will be announced in the coming months.
Proceeds from this Silver Bond issuance will be credited to the Capital Works Reserve Fund to support the implementation of various infrastructure projects. Senior residents who subscribe to the Silver Bond will not only receive stable interest income but will also contribute to the development of their communities and Hong Kong as a whole, making it a win-win investment.
With the Government’s support, more public organisations are raising funds through bond issuance or other means to better utilise market capital and advance their various initiatives. Since the beginning of this year, organisations such as Airport Authority Hong Kong, the Urban Renewal Authority, and the Hong Kong Housing Society have taken this route. Leveraging market resources for financing also enables organisations to draw on market expertise and experience to assess the financial viability and soundness of their projects.
In fact, bonds issued by both the Hong Kong SAR Government and public sector entities in Hong Kong have been well received by local and institutional investors, and they were often oversubscribed by multiple times. These investors include banks, asset management companies, insurance companies, pension funds, government agencies and family offices, among others.
By continuously promoting financial services to support the real economy and initiatives in various areas such as I&T industries, infrastructure development, and green transformation, Hong Kong will achieve faster and better development with a brighter future.
September 15, 2024
