Tsang seeking Asian channel
Financial Secretary Donald Tsang Yam-kuen yesterday made a public call for more rapid development of an efficient debt market in Asia to provide an alternative channel for corporates in the region to raise funds.
Delivering the keynote address at the Asian Debt Conference, Mr Tsang said the failure to establish such a market could have been one of the chief reasons for the region's crisis.
He said Asian economies had been characterised by their over-reliance on short-term bank borrowings, making them more vulnerable to sharp liquidity shock once the region's bank credit shrank and stock markets collapsed.
Mr Tsang quoted statistics from Nomura Research which suggested that in eight Asian countries total funds from bank loans comprised 92 per cent of aggregate gross domestic product, compared with 71 per cent from stock markets and 22 per cent from bond markets.
He believed an efficient debt market in Asia could help tap the region's surplus savings to finance economic growth.
'There is no shortage of domestic savings in Asia. They stand at more than 30 per cent of the region's GDP . . . it is the lack of a sound, robust intermediation channel in Asia that has brought about the liquidity problems in the region,' he said.
Mr Tsang attributed previous debt market underdevelopment to the reluctance of Asian governments to borrow because of continued budget surpluses, and the lack of institutional investor participation and high quality regular issuers.
He said Hong Kong would play a part in building the region's own bond market as it was prepared to invest reserves in high-quality Asian issues with proper credit ratings, regular issuing patterns and denominated in key currencies.
At the same conference, Hong Kong Mortgage Corporation vice-president Philip Li Wing-kuen called for more involvement from regional bodies such as the Asian Development Bank to help ease the liquidity crunch.
He believed it was unwise for Asia's economies to sit back and wait for International Monetary Fund bailouts because the IMF mandates tended to pave the way for IMF members to do better business in countries it rescued.