Hong Kong on track to emerge as infrastructure fund raising hub

PUBLISHED : Tuesday, 05 July, 2016, 1:56pm
UPDATED : Tuesday, 05 July, 2016, 2:08pm

Market uncertainties created by the Brexit factor will not affect Hong Kong’s ability to help raise up to US$8 trillion in infrastructure financing needed in Asia through 2020, according to Laura Cha chairwoman of Financial Services Development Council of Hong Kong.

“The market uncertainty related to Brexit is not only affecting Hong Kong but also other financial centres. When markets return to a more stable footing, Hong Kong can compete for many of the infrastructure fund raising projects in the years ahead,” Cha told the South China Morning Post on Tuesday at the Boao Forum co-hosted by Hong Kong Monetary Authority.

The surprise outcome of the British June 23 vote on membership in the European Union, which saw the leave camp receive 52 per cent support, surprised global markets, triggering a sharp sell-off in Hong Kong and Japan, when the results became public around lunch time in Asian trading hours on June 24. The Hang Seng ended the session down 600 points, or 2.9 per cent. Tokyo’s Nikkei ended down 8 per cent, while the British pound swooned to its lowest level in 31 years.

Brokers believe the uncertainties will continue to weigh on the market as the negotiations over Brexit will be ongoing for two years.

Cha however said the volatile markets were unlikely to derail fund raising for quality projects.

Mainland China’s One Belt One Road initiative will link up 60 countries, necessitating investment in railways and other infrastructure projects to promote trade and economic growth.

Cha said the FSDC will work closely with the HKMA’s newly formed Infrastructure Financing Facilitation Office IFFO to promote Hong Kong as a hub for infrastructure financing.

“FSDC always has the mission to promote financial services in Hong Kong. FSDC will support IFFO to promote Hong Kong as an ideal place for many Asian infrastructure projects to raise funds. We will work out the details later,” she said.

FSDC is a government appointed body tasked with promoting Hong Kong as a financial centre, The IFFO, officially formed on Monday, is led by HKMA senior executives with 41 bank and financial partners to find ways to promote Hong Kong infrastructure financing. The Boao Forum is sponsored by the IFFO.

Financial Secretary John Tsang Chun-wah instructed the HKMA in February to set up IFFO. Tsang delivered a keynote speech at the forum earlier Tuesday.