Opinion / Liang Hongfu
HK on right track for development
By Liang Hongfu (China Daily)
Updated: 2006-04-25 06:33
The debate over Hong Kong's relevance to future economic development on
the mainland has continued to rage since the topic was raised a few weeks
ago by a number of top government officials and business leaders.
Many politicians and economists have put forward their viewpoints. But
the general consensus seems to have shifted in favour of the argument
that Hong Kong has nothing to fear as long as it succeeds in
strengthening its existing advantages, especially in financial services.
As such, Hong Kong's position as an important source of funds to help
finance the economic development of the mainland can be assured.
Indeed, Hong Kong people take for granted many of the advantages their
city has enjoyed for so long. As a result, they tend to look immediately
for new solutions outside the existing system when they are called upon
to face real or imagined challenges posed by changes in the economic
environment.
This, of course, is not necessarily a bad thing. There are times when
relatively more developed economies need to be re-engineered to survive
new challenges. But for Hong Kong, this is not such a time.
In fact, Hong Kong has succeeded in transforming itself from a low-cost
manufacturing base to a highly sophisticated financial centre since China
began to pursue economic reform and an open-door policy. In the process,
many businesspeople in Hong Kong have won fame and fortune.
While their success stories may have enthralled many, it is important to
bear in mind that the great adventure was underscored by a
long-established social, economic and legal system that has remained
largely unchanged. In a recent speech, Martin Wheatley, chairman of Hong
Kong's Securities and Futures Commission (SFC), a watchdog agency, summed
up the importance of such a system to the operation of an efficient
capital market:
"Hong Kong has a fair and open market for all. Almost all international
securities firms and investment banks are present in Hong Kong.
"Sophisticated and institutional investors have confidence investing in
this market ... Much of this can be attributed to the presence of a
robust banking system with a free foreign exchange policy that encourages
free fund flows and a free market that is able to realize the potential
of full market economy.
"Hong Kong is a place that offers a reliable and transparent regulatory
and legal system the legal system here is well-founded and has proven to
be dependable and fair. Parties contracting under the Hong Kong laws can
have faith that our judicial system fairly and independently administers
the law and that property rights of individuals and corporations are well
protected."
It is easy to understand why so many mainland enterprises have tapped the
Hong Kong stock market for development funds. Over half of the HK$294
billion (US$38.2 billion) raised in the Hong Kong stock market in 2005
was raised by enterprises from the Chinese mainland or companies that
have significant mainland operations, according to Wheatley. This
includes the mega listing of the China Construction Bank, which was
reported to be the world's largest initial public offering (IPO) since
2001.
The task at hand, Wheatley and others agree, is to enhance market
transparency and tighten market regulations against fraud to entice an
even greater flow of institutional investment funds to the local bourse.
The increase in market liquidity will, in turn, attract more mainland
enterprises to seek a listing on the Hong Kong stock market.
A centrepiece in the government's efforts to ensure transparency is the
proposal to give statutory power to the Hong Kong stock exchange listing
rules, including the important disclosure requirements. Statutory backing
of the exchange rules should help bring Hong Kong's regulatory regime
into line with international standards and practices.
Other initiatives include tighter regulations on sponsors of IPOs and
stock analysts. The government is also stepping up measures to control
the level of risk that stock brokerages are allowed to take. In addition,
the SFC is keeping a close watch on the increased popularity of stock
derivatives to see what new regulations need to be introduced to minimize
market risks.
And so it seems Hong Kong is moving on the right track to maintain a
relevant role in the development of the mainland economy. A lot more
needs to be done, of course. But at least we are not standing still.
(China Daily 04/25/2006 page4)
Hot Talks
� Do teenagers really need mobiles?
� China's Serious Environment Problem
� Learning chinese using qq
� Why we need schooling?
� Poll: Do you support the new chopsticks tax?
Most Commented/Read Stories in 48 Hours
No comments:
Post a Comment