Qianhai the likely winner in the rush for Hong Kong investment

Of Guangdong's three special economic zones, Qianhai is most attractive for financial investors

PUBLISHED : Tuesday, 18 June, 2013, 12:00am
UPDATED : Tuesday, 18 June, 2013, 4:35am

The three special economic zones in Guangdong are rushing to Hong Kong, seeking investors' money. So which is the best one to put your money into?

Hengqin, Qianhai and Nansha have been earmarked in the mainland's 12th five-year plan as testing grounds for new free-trade-zone concepts. Their officials are keen on coming to Hong Kong to tap funds for their many ambitious projects. They are all similar - newly developed areas with new infrastructure projects linking them to neighbouring cities and tax rates for selected companies of 15 per cent instead of the standard 25 per cent.

Attractive? It all depends on what you are doing. For Hong Kong financial firms and brokers, they obviously rank Shenzhen's Qianhai as their top priority. Although only 15 square kilometres in size, Qianhai is in a unique position. The central government in June last year named Qianhai as the testing ground for further yuan liberalisation and capital account convertibility. In January, banks were allowed to make cross-border yuan loans and lend a combined 2 billion yuan (HK$2.52 billion ) to mainland firms setting up in the zone.

Stockbrokers have lobbied Shenzhen officials to allow them to set up joint ventures in Qianhai with mainland firms. The Hong Kong government is also lobbying for the zone to allow Hong Kong-based private equity companies to do more business there.

In summary, Qianhai has become a goose that may lay a golden egg in the eyes of the financial firms.

In contrast, the other two are not as attractive as Qianhai, since their strengths are not in the financial field.

Officials from Zhuhai and its special economic zone, Hengqin, were in town last week to look for more Hong Kong investors. It has already attracted 226 billion yuan of investment in its first three years, mainly in tourism and leisure projects. That may make it suitable for retail and other service industry operators.

Hengqin, with an area of 106 square kilometres, is an island that is a short ferry ride from Macau but takes an hour to get to from Hong Kong by high-speed boat. But the Hong Kong-Zhuhai-Macau bridge, which is under construction, will allow Hongkongers to reach Hengqin within 30 minutes. But the bridge will only open in 2016. Let's think about Hengqin later.

In May, Hong Kong received an official delegation from Nansha, which signed 17 co-operative agreements for a total 234.8 billion yuan of investment with Hong Kong enterprises, universities, energy and film productions. Nansha is the biggest of the three areas, covering an area of 803 square kilometres, with a population of 720,000. The area seems more suitable for manufacturers and logistic operators. But Nansha does not have the blessing of the yuan or capital account convertibility. Because of this, in the eyes of our bankers and brokers, it is not that attractive.