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Creating New Opportunities through Cooperation
The US Federal Reserve cut interest rates by 0.5% last week, which was the first rate cut in more than four years. Along with the fact that a number of major central banks around the world had also cut interest rates earlier, this has reinforced the financial market’s expectation of a gradual decline in interest rates around the world. The relaxed financial environment has also been conductive to boosting the asset market sentiment and enhancing the operating environment of the industrial and commercial sectors. Although it can be expected that the trend of interest rates in Hong Kong will be broadly in line with that of the United States under the Linked Exchange Rate System, the pace and magnitude of the downward adjustment will depend on the capital flow and market conditions in Hong Kong. The Hong Kong stock market has rebounded to its highest level in more than two months. The Hang Seng Index closed at 18,258 points last Friday, with a cumulative increase of close to 7% in six consecutive trading days. Market turnover also improved, with trading volume reaching HK$176.8 billion last Friday, a new high in nearly four months.
The sentiment in the stock market is improving, and the initial public offering (IPO) market is also gradually picking up. Last week, we saw a large-scale listing raising HK$31 billion, making it the second largest IPO in the world this year. Taking into account this new offering, the amount of IPO funds raised in Hong Kong this year has exceeded that of last year, taking us to the fourth place in global ranking. Currently, there are about 100 listing applications under processing in Hong Kong, some of which are seeking to raise funds of up to US$1 billion. In addition to the IPO market, follow-on fundraising activities of listed companies are also active, with over US$20 billion raised so far this year.
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| Attending and speaking at the 27th Beijing Hong Kong Economic Cooperation Symposium and the Hong Kong Investment Promotion Conference last week. |
In fact, Hong Kong has continued to record a net capital inflow. In the first seven months of this year alone, total bank deposits increased by about 4% to $16.8 trillion as compared with the end of last year. As the general environment gradually turns favourable, we need to further step up our efforts to promote the Hong Kong market, and also strive to open up broader and more diversified capital sources for the Hong Kong market when investment risk appetite is recovering and investors are chasing higher returns.
Following the listing of the Asia-Pacific’s first exchange-traded fund (ETF) tracking Saudi Arabian stocks in Hong Kong at the end of last year, the Capital Market Authority of Saudi Arabia recently announced its approval for the first ETF investing in Hong Kong stocks to list on the Saudi Stock Exchange. The listing will not only facilitate local and Middle East capital to directly invest in stocks listed in Hong Kong, it will also deepen local investors’ knowledge of Hong Kong stocks. I will lead a delegation to visit the Middle East at the end of next month, hoping to promote deeper exchanges and cooperation in different areas.
We will continue to strengthen promotion and initiate more cooperation in various traditional and emerging markets. As interest rates fall, we believe our efforts could better leverage funds from different places and inject new impetus into Hong Kong’s capital market.
I departed for Europe in the early morning today in a trip to attract enterprises and investments, and will visit Madrid and London. In addition to meeting with representatives of the local political and business circles and visiting enterprises, I will also attend a series of luncheon and dinner receptions and roundtable discussions to promote Hong Kong’s advantages. We have formed a delegation of Hong Kong startups to join the visit so that they could exchange views with local innovation and technology (I&T) institutions and venture capital funds, with a view to exploring more collaboration opportunities.
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| Visiting the Ministry of Finance and meeting with Mr Lan Fo’an, Minister of Finance, during my visit to Beijing. |
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| Meeting with Mr Li Tie (second right), Executive Director and Chief Financial Officer of Li Auto as we worked to attract enterprises and investment during my visit to Beijing. |
Exchange activities, whether conducted overseas or on the Mainland, or intra- or cross-industry, can often deepen mutual understanding, stimulate new ideas, and bring opportunities for cooperation. The 27th Beijing Hong Kong Economic Cooperation Symposium and the Hong Kong Investment Promotion Conference recently held in Beijing was well received. A signing ceremony for a number of key co-operation projects between Beijing and Hong Kong was held, covering a number of sectors including finance, technology, smart manufacturing, etc. About 170 bilateral investment and business promotion projects were concluded, with a total investment of around RMB42 billion.
By actively promoting I&T development and encouraging entrepreneurship, as well as fostering closer cooperation among industries, we are striving to capitalise on the enormous opportunities arising from technological changes, and nurture more entrepreneurs with aspirations, motivation and execution capability. We will encourage more enterprises to engage in innovation and exploration to provide clients and consumers with more new products and services, creating more room for business. This will be key to bringing about more vitality and momentum to our economy.
September 22, 2024
