Speaking at the second Global Financial Leaders’ Investment Summit in Hong Kong at the Four Seasons hotel on November 7, Hong Kong’s financial secretary Paul Chan said he wanted to develop the renminbi (Rmb) dual counter to be included southbound in the Stock Connect, a market access programme for investors between mainland China and Hong Kong.
Chan (pictured) said: “24 major stocks can be traded at same time in Hong Kong dollar and renminbi. We are working very hard for the Rmb counter to be included southbound on the Stock Connect. We are working with the regulators and with the blessing of mainland authorities. We want more quality issuers and connectivity.”
"The connectivity with China will continue to improve. More visitors will come and more business will flow from that." Paul Chan, Hong Kong's financial secretary
Chan was speaking a few days after Q3 2023 GDP figures showed growth of 4.1% – slower than expected, but a recovery that is “sustainable”.
He added, “For the Hong Kong economy – we expect our GDP growth to be over 3% this year – a little slower than we would like to see. The connectivity with China will continue to improve. More visitors will come and more business will flow from that. The major driver of our economic growth will be export of services, tourism arrival and private consumption. The twin areas of growth will be financial services and innovation and technology.”
Chan continued: “Over the past few years the government has invested close to HK$200 billion ($25.6 billion) into the economy to build a sustainable driver for the economy. It will give our people better quality job options in the likes of artificial intelligence and big data analytics, fintech and bioscience, advanced manufacturing. Building such an ecosystem is not easy. Since September we have attracted 30 companies which will spend HK$30 billion and create 10,000 jobs mostly in research and managerial roles.”
He added that a Hong Kong talent scheme, up until the end of September 2023, had received over 180,000 applications with over 100,000 of them approved and with over 70,000 having already arrived.
Mounting risks
Despite Chan’s optimism, there are clearly mounting risks in the global financial system.
In a panel discussion at the event Bob Prince, co-chief investment officer, Bridgewater Associates, spoke about some of the significant events of the year, such as the collapse of Silicon Valley Bank (SVB).
Prince said, “The events of March were a perfect example of the asset liability management mismatch."
He continued, "People need to pay attention to debt rollovers. The holders of the debt are important to look at. 27% of US treasury debt is held by foreign investors which heightens the sensitivity to geopolitical risk. 18% is owned by central banks – not the usual buyers of bonds – will they roll over that debt? 15 years of abundant free money has fuelled the private equity boom – the pace and transaction is bound to slow with higher interest rates. Many institutional investors are experiencing liquidity issues – something that needs looking at, while the leveraged loan market is also something to watch.”
In another panel discussion, Ken Griffin, founder and CEO, Citadel, fired a warning shot on the impact of deglobalisation.
He said: “The wildcard is the inflationary effects of deglobalisation. We don’t know what this world looks like and what it means for monetary policy. We are likely to see a slowdown in the economy in mid to late next year.”
However, Griffin is bullish on China. He continued: “There is more innovation outside of the US. The management teams in China are extremely competent – and the Chinese have great products such as solar – if you are a global investor you have to be investing in China.”
