hong kong as an international financial center. linked exchange rate in hong kong history
TRANSCRIPT
![Page 1: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/1.jpg)
Hong Kong as an international financial center
![Page 2: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/2.jpg)
Linked Exchange Rate in Hong Kong
History
![Page 3: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/3.jpg)
100 % backup
Linked with USD
Have two exchange system: a. Linked Exchange Rate b. Market Exchange Rate
Linked Exchange Rate: Fixed 1 USD= 7.8 HKD Issue Bank & Foreign Exchange Fund
Market Exchange Rate: Demand / Supply Exchange Branch, Bank Low floating rate
![Page 4: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/4.jpg)
Linked Exchange Rate
![Page 5: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/5.jpg)
Why Hong Kong choose Linked Exchange Rate System
USD ( High Liquidity, High Credibility , High Circulation)
Financial Crisis (1983)--- Political Factor
High Stability (Hong Kong was a Colony)
Mainly focusing on service industry ( Less affection from unfavorable balance of trade)
Price of Land is very High
Maintain the regulation of financial system
![Page 6: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/6.jpg)
Automatic Stabilizer
① Sell HKD ( Large amount)② Supply of HKD↑ Interest Rate ↓③ HKMA Buy HKD back④ USD Supply ↑⑤ Interest Rate of HKD↑ (even higher then USD)
Demand of HKD ↑ Exchange Rate ↑
![Page 7: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/7.jpg)
Cannot reflect the economic performance
Monetary policy become very inelastic
Less Competitive1. Balance of payment 2. Re-export3. Logistic
Exchange Rate will ceaselessly drop until it reach EQ
![Page 8: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/8.jpg)
Average inflation rate : 1983-1986
Hong Kong 7.79%
USA 3.35%
Space of HKD to be appreciated was very large
![Page 9: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/9.jpg)
Financial Crisis (1998)
Countries among Asia region depreciate their currency to adapt the economic down turn
Highly affect Hong Kong re-export industry
1999 ‘s gross export volume dropped 12.7%, reaching 13979 billions
![Page 10: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/10.jpg)
Competition from Singapore
Another financial centre in the same region
Operate in the same market segmentBeing geographically close to each
otherBelonging to the same time zone
![Page 11: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/11.jpg)
• HK and Singapore have been rivals for the title of the second largest financial centre in the Asia-Pacific region (the largest is Tokyo)
• Singapore’s long term objective:To replace HK after 1997 as the
second largest IFC in the region
![Page 12: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/12.jpg)
Similarities between HK and Singapore
• Both are free ports• Both are small open economies• Both have a background of British
rule• Both use the English legal system• Both use the English languagethe challenge from Singapore is
much more immediate and direct
![Page 13: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/13.jpg)
HK vs Singapore
• The Monetary Authority of Singapore( MAS) was established in 1971
• Abolition of the interest rate cartel among banks was completed in 1975
• The Hong Kong Monetary Authority (HKMA) was established in 1993
• Only recently in HK
![Page 14: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/14.jpg)
HK vs Singapore• Singapore’s second
board, SESDAQ, was established in 1987
• MAS launched the revamped government securities market in 1987 as one of the measures to develop a domestic bond market
• More than a decade of HK’s GEM
• HK started its Exchange Fund bills programme in 1990
![Page 15: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/15.jpg)
HK vs Singapore
• HK’s exchange may be switching to longer trading hours and lower brokerage fees
• Singapore implemented these long ago• Their propaganda emphasize the same thing
-time zone advantage
-excellent infrastructure
-political stability
-a strong and stable currency
![Page 16: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/16.jpg)
• Facing the challenge from Singapore,• However, HK keeps its competitive
power • Can be proved by three released reports
1. Economic Freedom of the World: 2005 Annual Report
2. The 2005 Index of Economic Freedom
3. The Capital Access Index 2005
![Page 17: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/17.jpg)
Economic Freedom of the World: 2005 Annual Report
• HK has consecutively retained its top ranking in the Economic Freedom of the World for 9 years
• Scoring 8.7 out of 10• Closely followed by Singapore’s 8.5• New Zealand, Switzerland and the US tied for th
ird with ratings of 8.2 • HK was also voted the best area of freedom to t
rade internationally and regulation of credit, labour and business and second in size of government
![Page 18: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/18.jpg)
The 2005 Index of Economic Freedom
• HK has consecutively ranked the world’s freest economy, scoring 1.35
• again ,the second is Singapore, scoring 1.6
• The Luxembourg ranked the third, scoring 1.63
![Page 19: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/19.jpg)
The Capital Access Index 2005• The Top 10 markets (with 2004 ranking): • 1. United Kingdom (3)
2. Hong Kong (1)3. Singapore (2)4. United States (6)5. Sweden (4)6. Denmark (9)7. Australia (7)8. Norway (13)9. Finland (5)10. (tie) Canada (10)10. (tie) Ireland (11)
![Page 20: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/20.jpg)
It seems that HK is still leading Singapore at the moment
CAUTION:
Singapore may follow HK closely enough to overtake HK someday !
![Page 21: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/21.jpg)
Prospects
![Page 22: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/22.jpg)
Enchancing our Position as an IFC
1. Hong Kong ranked 1st in Asia and 3rd in the world last year in terms of capital raised,
• with total Initial Public Offering (IPO) and post-IPO equity funds reaching some $265 billion,
• out-performing the London and Tokyo Stock Exchanges.
![Page 23: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/23.jpg)
2. 2004
• a total of 304 Mainland enterprises
compare with 2003
22%
Over ¼ of the total no of listed companies
30% of total stock market capitalisation
half of our total market turnover
![Page 24: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/24.jpg)
3. Market capitalisation also hit a new high of about $6,650 billion, nearly 50 % above the pre-reunification level
4. > 70 % of their trading is conducted in Hong Kong .
![Page 25: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/25.jpg)
Reinforcing our Renminbi Business 1. 1st place outside the Mainland to conduc
t personal Renminbi (RMB) business, including
• deposit-taking,• currency exchange,• remittances • credit cards total of 38 Hong Kong retail banks
first three services
![Page 26: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/26.jpg)
Three strategic directions will be indicated :
• exploring the diversification of the RMB assets and liabilities of Hong Kong banks; particularly on the liability side, diversification to non-residents and non-individuals of deposits now restricted to resident individuals.
![Page 27: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/27.jpg)
Three strategic directions will be indicated :
• exploring the provision of appropriate RMB banking services for trade and other current account transactions between Hong Kong and the Mainland.
![Page 28: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/28.jpg)
Three strategic directions will be indicated :
• exploring the feasibility of establishing a RMB debt issuance mechanism in Hong Kong.
![Page 29: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/29.jpg)
![Page 30: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/30.jpg)
Promoting the Bond Market
e.g. 5 tunnels and 1 bridges.
• a $6 billion securitisation bond was issued
the largest-ever securitisation bond offering in Hong Kong
1st made available to retail investors.
![Page 31: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/31.jpg)
e.g. In July last year, the Government launched its $20 billion global bond offering.
• This was the largest multi-tranche offering from the region, available to both retail and institutional investors.
• the largest subscription and issue amounts for a retail bond.
![Page 32: Hong Kong as an international financial center. Linked Exchange Rate in Hong Kong History](https://reader035.vdocuments.net/reader035/viewer/2022062516/56649de85503460f94ae28a2/html5/thumbnails/32.jpg)