Transcript 投影片 1 - Hong Kong Shue Yan University

Hong Kong as an international financial center
Linked Exchange Rate in Hong Kong
History
100 % backup
Linked with USD
Have two exchange system: a. Linked Exchange Rate

b. Market Exchange Rate
Linked Exchange Rate: Fixed 1 USD= 7.8 HKD

Issue Bank & Foreign Exchange Fund
Market Exchange Rate: Demand / Supply

Exchange Branch, Bank

Low floating rate
Linked Exchange Rate
Why Hong Kong choose Linked Exchange Rate System
USD ( High Liquidity, High Credibility , High Circulation)
Financial Crisis (1983)--- Political Factor
High Stability (Hong Kong was a Colony)
Mainly focusing on service industry
( Less affection from unfavorable balance of trade)
Price of Land is very High
Maintain the regulation of financial system
Automatic Stabilizer





Sell HKD ( Large amount)
Supply of HKD↑ Interest Rate ↓
HKMA Buy HKD back
USD Supply ↑
Interest Rate of HKD↑
(even higher then USD)
Demand of HKD ↑ Exchange Rate ↑
 Cannot reflect the economic performance
 Monetary policy become very inelastic
 Less Competitive
1. Balance of payment
2. Re-export
3. Logistic
 Exchange Rate will ceaselessly drop until it reach EQ
Average inflation rate : 1983-1986
Hong Kong 7.79%
USA
3.35%
Space of HKD to be appreciated was very large
Financial Crisis (1998)
Countries among Asia region depreciate their currency to adapt the economic
down turn
 Highly affect Hong Kong re-export industry
1999 ‘s gross export volume dropped 12.7%, reaching 13979 billions
Competition from Singapore
Another financial centre in the same
region
Operate in the same market segment
Being geographically close to each other
Belonging to the same time zone
• HK and Singapore have been rivals for
the title of the second largest financial
centre in the Asia-Pacific region (the
largest is Tokyo)
• Singapore’s long term objective:
To replace HK after 1997 as the second
largest IFC in the region
Similarities between HK and
Singapore
• Both are free ports
• Both are small open economies
• Both have a background of British rule
• Both use the English legal system
• Both use the English language
the challenge from Singapore is much
more immediate and direct
HK vs Singapore
• The Monetary
Authority of
Singapore( MAS) was
established in 1971
• Abolition of the
interest rate cartel
among banks was
completed in 1975
• The Hong Kong
Monetary Authority
(HKMA) was
established in 1993
• Only recently in HK
HK vs Singapore
• Singapore’s second
board, SESDAQ,
was established in
1987
• MAS launched the
revamped
government
securities market in
1987 as one of the
measures to
develop a domestic
bond market
• More than a decade
of HK’s GEM
• HK started its
Exchange Fund bills
programme in 1990
HK vs Singapore
• HK’s exchange may be switching to longer
trading hours and lower brokerage fees
• Singapore implemented these long ago
• Their propaganda emphasize the same thing
-time zone advantage
-excellent infrastructure
-political stability
-a strong and stable currency
•
•
Facing the challenge from Singapore,
However, HK keeps its competitive
power
• Can be proved by three released
reports
1. Economic Freedom of the World:
2005 Annual Report
2. The 2005 Index of Economic
Freedom
3. The Capital Access Index 2005
Economic Freedom of the World:
2005 Annual Report
• HK has consecutively retained its top ranking
in the Economic Freedom of the World for 9
years
• Scoring 8.7 out of 10
• Closely followed by Singapore’s 8.5
• New Zealand, Switzerland and the US tied
for third with ratings of 8.2
• HK was also voted the best area of freedom
to trade internationally and regulation of
credit, labour and business and second in
size of government
The 2005 Index of Economic
Freedom
• HK has consecutively ranked the world’s
freest economy, scoring 1.35
• again ,the second is Singapore, scoring
1.6
• The Luxembourg ranked the third, scoring
1.63
The Capital Access Index 2005
• The Top 10 markets (with 2004 ranking):
• 1. United Kingdom (3)
2. Hong Kong (1)
3. Singapore (2)
4. United States (6)
5. Sweden (4)
6. Denmark (9)
7. Australia (7)
8. Norway (13)
9. Finland (5)
10. (tie) Canada (10)
10. (tie) Ireland (11)
It seems that HK is still leading Singapore at
the moment
CAUTION:
Singapore may follow HK closely enough to
overtake HK someday !
Prospects
Enchancing our Position as an IFC
1. Hong Kong ranked 1st in Asia and 3rd in the
world last year in terms of capital raised,
•
•
with total Initial Public Offering (IPO) and
post-IPO equity funds reaching some $265
billion,
out-performing the London and Tokyo Stock
Exchanges.
2. 2004
•
a total of 304 Mainland enterprises
compare with 2003
 22%
 Over ¼ of the total no of listed companies
 30% of total stock market capitalisation
 half of our total market turnover
3.
Market capitalisation also hit a new high of about
$6,650 billion, nearly 50 % above the pre-reunification
level
4.
> 70 % of their trading is conducted in Hong Kong .
Reinforcing our Renminbi Business
1. 1st place outside the Mainland to
conduct personal Renminbi (RMB)
business, including
• deposit-taking,
• currency exchange,
• remittances
• credit cards
total of 38 Hong Kong retail banks
 first three services
Three strategic directions will be indicated :
•
exploring the diversification of the RMB
assets and liabilities of Hong Kong banks;
particularly on the liability side,
diversification to non-residents and nonindividuals of deposits now restricted to
resident individuals.
Three strategic directions will be indicated :
•
exploring the provision of appropriate
RMB banking services for trade and
other current account transactions
between Hong Kong and the Mainland.
Three strategic directions will be indicated :
•
exploring the feasibility of establishing a
RMB debt issuance mechanism in Hong
Kong.
Promoting the Bond Market
e.g. 5 tunnels and 1 bridges.
• a $6 billion securitisation bond was issued
the largest-ever securitisation bond
offering in Hong Kong
1st made available to retail investors.
e.g. In July last year, the Government
launched its $20 billion global bond
offering.
• This was the largest multi-tranche offering
from the region, available to both retail and
institutional investors.
• the largest subscription and issue amounts
for a retail bond.