Financial Secretary Highlights Hong Kong's Role in Strengthening Capital Market Connectivity at Riyadh Breakfast Meeting

Speech by FS at breakfast meeting hosted by HKEX in Riyadh, Saudi Arabia (with photos/video)

Following is the speech by the Financial Secretary, Mr Paul Chan, at a breakfast meeting hosted by the Hong Kong Exchanges and Clearing Limited (HKEX) in Riyadh, Saudi Arabia, today (October 30):

Carlson (Chairman of HKEX, Mr Carlson Tong), Mohammed (CEO of Saudi Exchange, Mr Mohammed Al-Rumaih), Bill (Group Chief Executive of Standard Chartered PLC, Mr Bill Winters), Darryl (Deputy Chief Executive of HKMA, Mr Darryl Chan), Bonnie (CEO of HKEX, Ms Bonnie Chan), distinguished guests, ladies and gentlemen,

Good morning, everyone. It is a great pleasure to join you today at this important breakfast session hosted by HKEX, right at the heart of the FII (Future Investment Initiative).

Before we begin, I want to extend my appreciation to HKEX for organising this session and to FII for providing a forum that brings global leaders together to address the future of investment. My special thanks to Mohammed, CEO of Saudi Exchange, and Bill, Global CEO of Standard Chartered, for joining this panel.

A moment for co-operation

There couldn't be a better time for us to gather and discuss how we can strengthen our capital market connectivity. The transformative agenda set forth by Saudi Arabia's Vision 2030 seeks to foster a dynamic society through extensive infrastructure projects, green transition, and digitalisation. This ambitious vision is driving significant reforms across various sectors, positioning the Kingdom as a leader in economic diversification and innovation.

In light of the evolving geopolitical landscape and shifts in global economic gravity, Saudi Arabia and the broader Middle East are actively deploying their capital towards Asia. In this context, Hong Kong emerges as a pivotal player, serving as an international financial centre and a gateway to China and the wider Asian market.

Hong Kong's value proposition

Hong Kong's unique strengths are anchored in the "one country, two systems" framework, which China has committed to maintain over the long term. This arrangement allows Hong Kong to benefit from both the advantages of being part of China and the defining characteristics as an international city. We enjoy convenient, and at times privileged, access to the Mainland market while retaining our distinctive features, including a common law system, a judiciary that exercises powers independently, the free flow of capital, goods, information, and talent, a low and simple tax regime, and a currency pegged to the US dollar.

Hong Kong is one of the top three international financial centres globally, alongside New York and London. We have also recently been recognised by the Fraser Institute as the freest economy in the world. Our world-class professional services adhere to the highest international standards, bolstered by a wealth of international experience and extensive connections.

In short, Hong Kong presents unique advantages that can create significant value for Middle Eastern investors and capital. Hong Kong is an attractive destination for investment and collaboration, particularly in such areas as fund-raising, asset and wealth management, and green and sustainable finance. Allow me to elaborate.

Fund-raising markets

First, our fund-raising market. Our stock market has a capitalisation of over US$4.5 trillion, which is 12 times of our GDP. It went through some challenging times in 2023 and the earliest part of this. It is making a comeback, particularly following the recent announcement of a stimulus package by the central authorities, aimed at injecting liquidity into the banking sector and supporting the real estate market. Since then, the market has increased by about 15 per cent with high volume. We have seen strong buying interest from American and European investors, who accounted for approximately 85 per cent of the buy side by value. Notably, 90 per cent of these investors are long-term fund managers and investment banks.

Over the past few years, we have continuously reformed our listing regime. These reforms have broadened our market's appeal and positioned Hong Kong as a leading listing hub for innovative enterprises. For example we are now the second-largest biotech fund-raising hub after the United States.

Our country, China, has consistently supported the development of Hong Kong's stock market. Just this April, the China Securities Regulatory Commission announced five measures to bolster the development of Hong Kong's capital markets, including, for example, expanding the Connect Schemes we have with the Mainland to cover more ETFs (exchange-traded funds) and REITs (real estate investment trusts), and facilitating the listing of more leading Mainland companies on the Hong Kong Stock Exchange.

By the way, we are also actively enhancing our connectivity with new markets. Last year, we reached an agreement with the Saudi Exchange and Indonesia Stock Exchange to allow companies in these countries to secondary list on our Stock Exchange. As they come to Hong Kong, they are able to access both international capital and capital from the Mainland under the Connect Schemes.

The upcoming listing of two ETFs investing in Hong Kong stocks on the Saudi Exchange will be further reinforcing our links with Saudi Arabia.

Beyond stock market, we boast a vibrant private equity sector, which manages over US$230 billion in assets, making us number two in Asia, only after the Mainland. Indeed, Hong Kong has a comprehensive chain of funds supporting companies at various stages of growth.

Looking to the future, our stock market is poised to grow deeper and more robust. We are determined to attract more quality issuers from around the globe, and new capital sources, particularly Middle East and Asia.

Asset and wealth management hub

Second, asset and wealth management. Many Middle Eastern families and ultra-high-net-worth individuals are increasingly recognising the need to diversify their asset allocation and look beyond traditional American and European markets. They can certainly look to Hong Kong. We manage over US$4 trillion in assets, with more than half coming from outside Hong Kong and Mainland China. We are also home to 2 700 single-family offices. Beyond diversified investment offerings, we have established a robust network comprising private banks, accounting and legal firms, trusts, and other professional service providers, forming a strong nexus that caters to their needs. This is further complemented by our strong philanthropic culture and programmes for families to leave a lasting legacy, making a difference in the world and shaping a better future for generations to come.

Green and sustainable finance

Finally, green and sustainable finance. As a key component of Vision 2030, Saudi Arabia has embarked on the Saudi Green Initiative, with clear targets to increase the share of renewable energy, reduce carbon emissions, and enhance land and sea protection. This vision resonates with us well, and we stand ready to contribute.

Hong Kong is Asia's green finance capital, demonstrated by our leading position in arranging green and sustainable debt, averaging over $63 billion per year over the past three years, accounting for over one-third of Asia's total. Beyond volume, we are committed to building a green reporting system that meets the highest international standards, by adopting taxonomies interoperable with other international classification frameworks, and adhering to global sustainable reporting standards. Clearly, Hong Kong is an ideal platform for Saudi and Middle Eastern green and sustainable projects looking to access funds in our part of the world.

Concluding remarks

Ladies and gentlemen, I have just outlined some of the areas that Hong Kong can play in connecting capital, investments, and opportunities between our markets. I am eager to hear the valuable insights from our panelists this morning on how our capital markets can further collaborate and innovate.

I wish you all the best of health and business in the years to come. May our discussions today inspire new ideas and fruitful collaborations that lead to shared prosperity and growth for all.

Thank you!

Speech by FS at breakfast meeting hosted by HKEX in Riyadh, Saudi Arabia Source: HKSAR Government Press Releases

Speech by FS at breakfast meeting hosted by HKEX in Riyadh, Saudi Arabia Source: HKSAR Government Press Releases

Speech by FS at breakfast meeting hosted by HKEX in Riyadh, Saudi Arabia Source: HKSAR Government Press Releases

Government responds to Coroner's verdict on death inquest for vessel collision incident near Lamma Island in 2012

The Coroner's Court today (January 22) finished reading the verdict on the cause of death of the passengers involved in the vessel collision incident near Lamma Island in 2012.

A Government spokesman said the Government respects the judgment of the Coroner's Court and would study the verdict carefully with serious follow-up. At the same time, the Government expresses its deepest condolences to the families. After the incident, the Government conducted two investigations, including the one conducted by the Commission of Inquiry (CoI) established in accordance with the Commission of Inquiry Ordinance and the internal investigation led by then-Transport and Housing Bureau (then-THB); and accepted the expert reports under various investigations.

The Transport and Logistics Bureau has all along been supervising the Marine Department (MD) in following up on the recommendations of the CoI and the experts, and in adopting a systemic approach for fully implementing five categories of measures to enhance marine safety and prevent the recurrence of similar incidents. Relevant measures include -

Enhancing safety standards onboard: including requiring all passenger vessels' watertight doors to be fitted with visual and audio alarms; specifying the requirements of watertight door warning markings; improving the labelling and placement of life jackets; and establishing standards for securing seats to the deck;

Improving plan approval and vessel survey standards: including the creation of a dedicated team for plan approval for local vessels; introduction of standardised procedures for vessel surveys and plan approvals; introduction of the tripartite Inspection and Test Plan Scheme (ITP) for high-risk vessels by requiring the shipyard, shipowner and the MD to reach a consensus on important test items and acceptance criteria to clarify any misunderstanding or ambiguity regarding design and regulatory requirements, thus ensuring a vessel's watertight integrity and compliance with regulatory and contractual requirements;

Promoting operational safety within the industry: including the introduction of the common life jacket for use by adults and children; the enactment of the Marine Safety (Alcohol and Drugs) Ordinance to regulate drink and drug boating; and the mandate of lookout arrangements onboard vessels;

Strengthening industry professionalism and promoting safety culture: including the introduction of the Fast Speed Passenger Vessel Endorsement regime to enhance coxswains' and engine operators' navigational skills and ability to handle emergency situations, as well as the introduction of the Local Safety Management System; and

Introducing systemic reform of the MD's management and regulatory regime: including strengthening professional development of MD officers; launching of the electronic vessel survey system and introducing the use of electronic certificates to enhance work efficiency and quality.

Please refer to the Annex for details of the relevant measures.

As for the responsibilities of the MD officers involved, the then-THB forwarded the internal investigation report (THB Report) to the Civil Service Bureau (CSB) for follow-up, and the CSB has, in accordance with the recommendations in the THB Report and the legal advice from the Department of Justice, took actions according to the disciplinary procedures and finished following up on the relevant cases. There were also two MD officers involved who were criminally prosecuted and sentenced to imprisonment.

As regards the recommendations of the Coroner for the MD, including (1) to continue regular engagement with shipbuilders, marine transport service operators and relevant professional bodies or issue simple guidance notes or clarification to ensure that they understand the application of relevant rules and regulations; (2) to implement a new declaration system requiring vessel owners, before each periodical survey, to confirm whether any alterations have been made since the previous survey; (3) to continue to review the working hours and rest arrangements of seafarers, with a focus on identifying fatigue risks in day-to-day operations, and with major ferry operators consulted in the process and the Local Vessels Advisory Committee used as a forum for relevant discussions; and (4) to disseminate to the trade information on the recommendations the Coroner gave to Cheoy Lee Shipyards, the MD will seriously study them and follow up. In respect of the first recommendation, the MD has been stepping up communication with the industry and implemented the Local Safety Management system, with the adoption of a proactive risk management approach to enhance communication with the industry on marine safety issues. For the second recommendation, the MD is actively preparing for the introduction of a requirement under the existing ship inspection system that shipowners must declare that there were no unauthorised alterations of the vessels concerned prior to a survey. In respect of the third recommendation, the Government will review the working environment and conditions of local seafarers and will thoroughly consult relevant stakeholders. For the fourth recommendation, the MD will communicate with other shipyards in respect of the relevant issue.

The spokesman expressed that the Government will continue to work hand-in-hand with the industry to strengthen marine safety together.

Source: AI-found images