1 / 18

Hong Kong as a Financial Center for Asia: The Role of the China Link

Hong Kong as a Financial Center for Asia: The Role of the China Link. Olaf Unteroberdoerster IMF Resident Representative Hong Kong SAR March 2009. Motivation. Background paper for 2007 IMF consultation with Hong Kong SAR

taipa
Download Presentation

Hong Kong as a Financial Center for Asia: The Role of the China Link

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Hong Kong as a Financial Center for Asia:The Role of the China Link Olaf Unteroberdoerster IMF Resident Representative Hong Kong SAR March 2009

  2. Motivation • Background paper for 2007 IMF consultation with Hong Kong SAR • Document Hong Kong’s evolving role as an international financial center in the region • Identify key factors determining the success as an international financial hub • Assess the scope for future financial services growth

  3. Findings • Hong Kong has long track-record as Asia’s premier financial center • Special link with Mainland China • Supply-side factors play a role • Medium-term prospects : further financial opening of the Mainland will likely consolidate Hong Kong’s lead • Longer term prospects : will depend on ability to rely less on the Mainland as hinterland as financial system there modernizes

  4. Key trends: FDI • Hong Kong’s role appears small on a global scale 1998 2006 Percent of total bilateral flows

  5. Key trends: FDI • Within Asia, Hong Kong is only second to China 1998 2006 Percent of total bilateral flows

  6. Key trends: FDI • Hong Kong’s leading role in Asia rests on the China-link (contd.)

  7. Key trends: Portfolio Inv. • Hong Kong again appears to be a small player. 2005 2001 Percent of total bilateral investment

  8. Key trends: Portfolio Inv. • But in Asia it accounts for nearly one third of PI. 2005 2001 Percent of total bilateral investment

  9. Key trends: Portfolio Inv. • Inside Asia, Hong Kong plays a lead role, even without China HKSAR percent share in PI within Asia

  10. Key trends: Banking • Hong Kong plays an important, but less prominent role in cross-border banking activities, both globally…. 1998 2006 Percent of international lending and borrowing

  11. Key trends: Banking • … and inside Asia. 2006 1998 Percent of international lending and borrowing

  12. Gauging 3rd party flows • Presence in international finance due to: • (1) domestic demand; or • (2) services to non-residents • Share in world capital flows relative to share in world GDP gives better sense of (2) • HK, SGP, UK consistently stand out on this measure

  13. Gauging 3rd party flows(Intensity of foreign direct investment) Reminder: Share in bilateral flows, 2006

  14. ImplicationsDemand vs. supply • Hong Kong’s presence as an IFC derives primarily from services to non-residents • Yet, the China link dominates, particularly for FDI • Hong Kong resembles more NY (hinterland) than Singapore or London (no hinterland)

  15. ImplicationsDemand vs. supply • But supply side factors are also important

  16. Prospects for growth • Medium term outlook : Combination of special relationship with the mainland and supply-side strengths would be the key growth drivers • Illustration (taking FDI outflows as a benchmark) : outward portfolio investment from Mainland could amount to some US$ 200 billion • This would make Hong Kong by far the dominant portfolio investment center in Asia (2005 cross-border investment at some US$400 billion)

  17. Prospects for growth • Recent administrative measures seem to underscore Hong Kong’s privileged role • Mainland fund managers to establish subsidiaries here • Expansion of QDII • RMB deposits and trade settlement • RMB bond issuance

  18. Prospects for growth • Longer term : • How can HKSAR maintain its first-mover advantage? • Preeminence of financial centers can last long-time • But competitive strengths geared toward less China-centric model should be bolstered early

More Related