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Hong Kong Monetary Authority (HKMA)

John Tsang says HK ideal for infrastructure fund raising hub; highlights city’s ability to cope with deepening financial risks

PUBLISHED : Tuesday, 05 July, 2016, 4:13pm
UPDATED : Tuesday, 05 July, 2016, 4:13pm

Global markets are at a critical juncture as the uncertainties linked to Brexit and other economic problems threaten a “perfect storm”, according to Hong Kong Financial Secretary John Tsang Chun-wah, who sought to reassure that Hong Kong could cope with the challenges and remain a viable hub for infrastructure fund raising.

In a keynote speech at the Boao Forum on Tuesday, Tsang recounted the mounting risks to financial markets in the wake of Britain’s referendum vote to leave the European Union.

“The Brexit and the worries over the US interest rate hikes and the pace of economic recovery of Japan and Euro zone, the ingredients for a global economic perfect storm are there,” he said.

He warned the uncertainties would last for the next few years when Britain would negotiate with the EU on leaving terms.

Tsang noted that Asia has maintained economic growth momentum despite the 2008 financial crisis, adding that the region remains on track to achieve 6.3 per cent GDP growth per year due to the rising middle class, advanced technology development in Japan and South Korea and abundant low-cost labour markets in Cambodia and Bangladesh.

“Hong Kong, located at the heart of Asia, is well positioned to capture the business opportunities from the Asian growth,” Tsang said.

Tsang is a supporter of Hong Kong’s effort to develop into a hub for infrastructure financing. In February he asked the Hong Kong Monetary Authority to set up the Infrastructure Financing Facilitation Officr (IFFO), which officially launched on Monday.

The IFFO has 41 financial partners to promote Hong Kong’s fund raising role.

“The many infrastructure projects of the One Belt One Road scheme would need to raise US$800 billion per year from now until 2020. It includes many infrastructure projects to establish connections of trade, investment and people,” he said.

These include projects involving ports, highways, railway, and power plants. Tsang said governments, sovereign funds and private investors would finance these projects.

Hong Kong, which ranked No 1 globally in terms of funds raised via initial public offerings in 2015, and which also ranks as the world largest offshore yuan market, would be ideal to help raise funds for these projects, he said.

“Hong Kong’s rule of law, low tax rate, level playfield and open markets would be an ideal hub for infrastructure finance,” he said.