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Following is the speech by the Chief Executive, Mr Donald Tsang, at the Asian Financial Forum 2011 on "Conquering Crises ― Reshaping the Global Agenda" at the Hong Kong Convention and Exhibition Centre today (January 17):
Distinguished Guests Ladies and Gentlemen,
Good morning. I am indeed very delighted to welcome you all to this year's Asian Financial Forum (AFF).
Particularly, a heart-felt "thank you" to all our visitors, speakers and guests who have travelled long distances to be here.
We deeply appreciate your participation in this event under the theme "Asia: Reshaping the Global Agenda".
Since the first AFF in 2007 our region's economy has come full circle ― from growth to recession to recovery and back to growth.
As we meet today, it is relatively safe to say Asia has weathered this crisis. Our economies are confidently moving ahead again.
For the first time, the Asia-Pacific region is home to as many high net worth individuals as Europe. This is according to a report by Merrill Lynch and Capgemini published last October. The report states that, in 2009, three million people in the Asia-Pacific had investable assets of US$1 million or more. Asia, with robust GDP growth last year, also accounts for the fastest revenue growth for multinational companies.
This underscores our region's strong magnetism to investors.
Just last week, the Heritage Foundation and The Wall Street Journal published their 2011 Index of Economic Freedom. Hong Kong, Singapore, Australia and New Zealand ― four Asia-Pacific economies in the top four!
Terry Miller, of the Heritage Foundation, said economies that have stuck to the principles of economic freedom are growing faster than those that have tried to spend their way out of trouble.
Sovereign debt crises and high unemployment levels are undermining growth prospects in regions such as the Euro-Zone and the US. This will doubtless have an impact on Asia. Although we appear to have won the battle against the financial tsunami in Asia, the war still rages on.
With this in mind, I have turned to some words of wisdom from an old Chinese General, Sun Zi (孙子).
Sun Zi lived some 2 500 years ago, but his book, The Art of War (Sun Zi Bingfa 孙子兵法), remains popular today. No doubt, some of you will have a copy on your bookshelves. Sun Zi's thoughts on strategic planning are admired in various fields from modern military to elite sports and from politics to business.
In The Art of War, Sun Zi writes, "Know your enemy and know yourself; in a hundred battles you will never peril."
The Asian financial crisis ― the enemy at our gates in the late 1990s ― taught us much about our own economic strengths, weaknesses and vulnerabilities. We also learned about the complexities of dealing with a financial crisis in a globalised world. A decade later economies in Asia have been able to put this newfound knowledge and confidence to good use. Timely strategies helped to shore up our defenses against the recent global financial tsunami and Asia has escaped the peril.
Strategies alone are not enough to win the war, according to Sun Zi. He believes a good general must be able to combine strategies with military tactics.
Sound economic strategies and tactics, working hand-in-hand, have been key to our region's early recovery.
In Hong Kong, our main strategies have been to maintain a stable financial sector, preserve jobs and support businesses through the difficult times.
Various tactics have helped to achieve these goals.
They include a 100 per cent deposit guarantee scheme that helped to maintain confidence in our banking system. The scheme expired at the end of last year. In its place, we have introduced an enhanced $500,000 deposit protection scheme.
Several rounds of stimulus measures combined with targeted funding schemes, particularly for SMEs, have supported businesses and preserved jobs through economic turmoil.
Asia's wonderfully diverse characteristics have also opened up new supply chains and new markets across the region.
Going forward, our strategies and tactics are focused around opening up opportunities for business in our region and promoting greater transparency in our financial markets. In reshaping the global agenda, Hong Kong also has a leading role to play as China's global financial centre.
This brings me to the central theme of my talk.
In battle, Sun Zi noted, "When conditions are favourable, attack." Indeed it is important that we seize opportunities as they arise. And once seized, opportunities often multiply.
The financial crisis has presented our city with a number of extraordinary opportunities. Many of them have been linked to the Mainland's robust economic growth and rapid financial reform. As we have seized these opportunities, so they have multiplied. This is especially the case for our role as our nation's global financial centre.
China's growth story together with the external value of the Renminbi ― even though it is not convertible ― and news of monetary tightening, have become the focus of world financial markets.
As the economic gravity has shifted from West to East, so too has the financial gravity. Hong Kong, with its open markets and free flow of capital, is taking this opportunity to bridge China and the rest of the world.
For the second year in a row, Hong Kong has ranked number one in the world for funds raised through initial public offerings (IPOs). Early estimates put total IPO funds raised in Hong Kong last year at US$57 billion. That's an increase of almost 80 per cent compared to US$31 billion raised in 2009.
Increased participation of Mainland companies in our market has prompted some suggestions that Hong Kong is becoming more Chinese and less international.
In fact, Hong Kong has become a more global marketplace.
Mainland companies listing in Hong Kong comply with our international standards, which attracts foreign investors. Also, last year ― for the first time ― companies from Russia, France, Brazil and Mongolia listed in Hong Kong. These foreign firms benefit from institutional money from the Mainland as well as from wealthy investors in Hong Kong and Asia. At the same time, they raise their profile in the lucrative Mainland consumer market. We anticipate more overseas listings in Hong Kong this year.
Hong Kong has also become a location of first choice for global firms looking to buy into a piece of Asia's growth story.
Overseas hedge funds and private equity firms have been setting up in Hong Kong in droves. These international firms are keen to invest in Mainland companies listed in Hong Kong or invest directly on the Mainland.
In 2009, Hong Kong accounted for US$57 billion worth of capital under management for private equity. That's about 23 per cent of the Asian total.
Another fast multiplying opportunity is Hong Kong's role as a testing ground for the internationalisation of the Renminbi.
Since the Central Government in Beijing expanded the Renminbi trade settlement scheme last July, Hong Kong has seen a sharp rise in activity. In the first 11 months of last year, Hong Kong handled Renminbi trade settlement worth almost 270 billion Renminbi. That's more than 50 per cent of total Renminbi trade settlement.
Hong Kong's Renminbi bond market, which was launched in 2007, also expanded rapidly over the past 12 months. As well as local firms, global enterprises, including McDonald's Corporation and Caterpillar, have tapped into our so-called "dim sum bond" market. This is an attractive way to help fund their investments in the Mainland.
In the second half of last year, there were 16 Renminbi bond issuances in Hong Kong with a total value exceeding 35 billion Renminbi.
Ladies and gentlemen, I have mentioned some of the areas where opportunities have been seized and have multiplied in Hong Kong.
As China's global financial centre and as an international business hub with free flows of capital, information and talent, Hong Kong has been fully engaged in Asia's full circle back to economic growth and prosperity.
Today, our region has an opportunity to reshape the global agenda. We must continue linking traditional markets to new ones; continue promoting transparency and economic freedoms, and we must continue to strive for more stable and balanced growth pattern.
The AFF is an ideal platform to learn more about our region's economic strengths and weaknesses; to discuss financial strategies and tactics and to identify opportunities as they emerge and multiply.
I wish all of you a very fruitful and enjoyable AFF 2011 and a prosperous year ahead.
Thank you.
Ends/Monday, January 17, 2011
Issued at HKT 12:30
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