Tsang warns against too much regulation of financial markets
Chief Executive Donald Tsang Yam-kuen last night warned against regulation 'that stifles or strangles the development of financial markets or hinders the ability of business to access capital and credit'.
Speaking in London at an annual dinner organised by the Trade Development Council, Mr Tsang also warned against governments cutting back on spending.
'It may even be an opportune time to accelerate spending to help keep the wheels of domestic economies turning at a time when private investment and construction is under severe strain,' he said.
To an audience of mostly British businessmen and officials, Mr Tsang said: 'The financial services sector is bound to innovate and expose itself to risk. That is, after all, how we got into this mess in the first place.'
He said governments should 'close the loopholes that allowed this to happen', as well as provide adequate protection for investors.
'But we don't need regulation that stifles. History has shown us that markets nearly always overcorrect. We should avoid the same thing with regulation.'
Mr Tsang also said 'desperate times called for desperate measures' and recalled that despite scepticism at first, the government's purchase of the full range of Hang Seng Index constituent stocks to ward off an attack on the currency peg was eventually vindicated. 'I believe the same approach is needed again - except this time on a global scale,' he said.
Speaking earlier after a half-hour meeting with British Prime Minister Gordon Brown, Mr Tsang said the two leaders had discussed follow-up action to be taken after the weekend G20 economic summit.
He said there was a lot of work to be done between now and March, when world leaders were expected to meet again, and Mr Brown had told him he recognised the contribution Hong Kong could make with its experience in dealing with economic crises. One of the most crucial issues was restarting the stalled talks in the World Trade Organisation on a new trade deal, in which Hong Kong could play a key role.
Asked if there was anything the government could to stem the rising tide of layoffs in Hong Kong, Mr Tsang said it would think about how to create more jobs.
Mr Tsang will leave for Peru tomorrow to attend the 16th Apec Economic Leaders' Meeting.
