Hong Kong was recognised in 1993 as the Asian financial centre for securitisation, but its potential has fallen by the wayside
In 10 days, Asia's securitisation markets will descend upon Hong Kong to discuss and answer questions relating to their future in Asia.
The discussion at this conference will focus on which new products and structures will dominate market activity this year and next. But probably most important to the participants (issuers, investors, investment banks and professional service providers) will be the discussion about which Asian countries will have the greatest market potential.
In 1993 Hong Kong became the first Asian market to offer a securitisation transaction. It was immediately recognised as the Asian financial centre for securitisation with the necessary professional infrastructure: lawyers, tax advisers, auditors and trustees.
However, in recent years, Hong Kong's securitisation market has virtually fallen into extinction. There were three transactions in 2004, two last year and none so far this year. However, markets such as Japan, Korea, Taiwan and Singapore continue to have an increasing volume of new securitisation issuance across various asset types.
What has been causing Hong Kong's position to be eroded by these other countries? There are several explanations, but two generally accepted reasons.