Opinion | HK poised to promote financial market connectivity
By Dr. Kevin Lau
The national policy aims to strengthen the connectivity between domestic and international financial markets, creating a favorable environment for cross-border investment and financing. For Hong Kong, this is an opportunity that aligns perfectly with its interests. Enhancing financial market connectivity involves improving mechanisms such as Stock Connect and Bond Connect, as well as providing optimized products in areas such as RMB stocks, RMB bonds, RMB funds, and insurance. As an international financial center, Hong Kong naturally stands to benefit from these developments.
When it comes to connectivity, we can start by focusing on the Greater Bay Area. We should not underestimate the economic strength of the Greater Bay Area. With a resident population of over 70 million and an estimated total economic output of approximately 12.6 trillion RMB by the end of 2021, it is a formidable economic force. To put it into perspective, its economic value has already surpassed that of Russia (11.4 trillion) and Brazil (11.2 trillion). This means that a single bay area has surpassed the entire economies of other countries. Despite occupying only 0.6% of the country's land area, the Greater Bay Area contributes 11% of China's GDP and is home to 24 companies in the Fortune Global 500. Therefore, to revitalize Hong Kong's financial market, we don't need to look far. Starting with the Greater Bay Area would be a logical choice.
Recently, Hong Kong's economic environment has been less than ideal, with the stock market hitting new lows. However, I am not concerned as these are temporary fluctuations. While studying, I came across a quote from British Prime Minister Winston Churchill: "Never let a good crisis go to waste" This seems applicable to Hong Kong. If we maintain confidence, focus on new opportunities for economic development, actively seek new prospects, and actively integrate into the country's high-quality development, we will undoubtedly overcome the challenges and achieve new success.
Speaking from a self-interested perspective, connecting with the financial markets of the Greater Bay Area benefits not only others but also Hong Kong itself. Enhancing connectivity can accelerate the opening of the mainland's financial and capital markets, deepen financial system reforms, and attract foreign investors to enter the mainland's financial market. Overseas investors cannot ignore the advantages of Hong Kong's financial center during this process, as their funds can enter the mainland market through Hong Kong. Similarly, mainland funds can invest in overseas assets through mechanisms such as Stock Connect and cross-border wealth management channels. Regardless of the direction, Hong Kong's financial market stands to gain from these developments.