Guangdong to focus on capital, bond markets

Guangdong governor Huang Huahua has placed a priority on setting up a multi-tier capital market and a corporate bond market as part of the province's strategy to catapult Guangzhou and Shenzhen to regional financial hub status.

Delivering his working report for the next five years at the 11th Guangdong Chinese People's Political Consultative Conference, Mr Huang vowed yesterday to give the two cities regional recognition in financial services to attract multinational firms.

Mr Huang's pledge could bring to fruition a much-touted plan to set up a growth enterprise market, or a second board, on the Shenzhen stock exchange, some analysts said.

Opening a fund-raising channel for smaller and medium-sized domestic businesses was among a number of objectives on his agenda this year, despite a tightened domestic credit regime.

Guangdong vice-governor Song Hai said a pair of regional financial hubs would be complementary and mutually beneficial.

Asked if the move would threaten Hong Kong's position as Asia's financial centre, he said the city's status could only be strengthened, thanks to the different nature of the markets.

Guangzhou Academy of Social Sciences vice-president Liu Jianghua played down the competition issue, saying Hong Kong plays a role as a window into the west while the two Guangdong cities are a window into domestic markets.

'A financial centre in Hong Kong doesn't mean Guangzhou and Shenzhen can't have their own,' Mr Liu said.

He added Guangdong's average growth of 14.5 per cent in the past five years, heavy trading on the Shenzhen stock exchange and burgeoning logistics flow provided a solid foundation for the two cities to become regional financial centres for the hinterland.

He forecast demand for financial services in Guangzhou and Shenzhen would be driven by Guangdong's economic transformation into a high-technology and service-led economy from that of being the world's factory of low-value consumer goods.

Guangdong conference delegate Zeng Tao also called for the establishment of a futures market in Guangzhou, which could serve as a platform for sourcing raw materials, as the province relies heavily on imported resources.

'Guangdong's demand for resources is high, and a futures market for resources gives buyers more power in hedging prices,' Mr Zeng said.