Hong Kong fund industry should stand on its own
It's time to send Professor Chan Ka-keung back to school.
A holder of an MBA and a PhD in finance from the University of Chicago, we wonder if his former teachers might be foaming at the mouth at the secretary for financial services and the Treasury Bureau. Famed for being the home of Milton Friedman and other Nobel savages, the university is the academic citadel that preaches fair competition and free market with Hong Kong as its premier example. We wonder if Friedman would be rolling in his grave now that Chan and the government are again asking Beijing for a bailout.
"We have asked Beijing to let Hong Kong continue to be the only financial market worldwide with such a mutual recognition agreement as it would be a big boost for the city's asset management industry," Chan said.
"It would be possible for Hong Kong to enjoy the status for a while ... because Beijing has always been supportive of the Hong Kong fund industry."
The fund industry is inevitably the first to thunder about free market and enterprise whenever regulators want to introduce some rules to protect consumers but like any good capitalist, it's never averse to taking an unfair advantage. Our multimillionaire fund managers need all the help they can get from our "market-enabled" government. They have a reliable champion in the government, which acts on their behalf. MPF, anyone?
The mutual recognition agreement just signed will allow 600 billion yuan (HK$759 billion) in cross-border fund sales, with 100 Hong Kong funds issued by international fund houses sold on the mainland and 850 mainland funds sold here. The government, led by Chan, is once again, hat in hand, begging for a bailout so as to enjoy an exclusive agreement.
Nothing wrong with getting an unfair advantage if you are clever and aggressive enough; that's what real capitalism is all about. Just ask our tycoons. But the unseemly manner in which our officials keep begging Beijing for favours that often backfire - like the multiple-visit permits for Shenzhen visitors - just betrays incompetence, shamelessness and misdirected priorities.
If our fund industry is good enough, the rewards will come. If not, it's not Beijing's duty to bail us out.