By Selena Li and Dorothy Kam
HONG KONG (Reuters) – Hong Kong’s leader John Lee said on Monday the authorities were considering additional measures to bolster the securities market in the Asian financial hub, which has taken a hit from China’s economic slowdown and geopolitical tensions.
The city’s economy expanded by just 3.2% last year, and capital flight turned the Hong Kong stock market into the worst-performing major index last year. India has now overtaken Hong Kong in terms of the value of listed shares.
Lee told the inaugural HSBC Global Investment Summit in Hong Kong that a host of measures had already been taken, including improving the listing regime for specialised technology companies, to enhance competitiveness.
“We are pleased that we’re considering additional measures from improving the transaction mechanism to boosting investment services and stepping up market promotion,” he said, without giving any details.
Hong Kong’s Hang Seng Index tumbled nearly 14% in 2023, its fourth consecutive year of decline.
The city, which is a global hub for raising capital, saw the value of initial public offerings (IPOs) drop 28.5% in the first quarter of this year compared to the year-ago period to $507 million, according to LSEG data.
Battling high-interest rates, a complex geopolitical environment and ballooning budget deficits, Hong Kong in February announced a mix of measures to lure back capital, businesses, and visitors to the city.
Lee said these measures will help Hong Kong bounce back.
“As the measures take hold, and the macro environment improves, so too will be the sustainable development of the stock market – of that I have no doubt,” he said.
CHINA GATEWAY
Hong Kong has been a crucial gateway for investments in mainland China, and authorities in the city and the mainland have announced a few securities trading connect programmes in recent years to deepen investor access to each other’s markets.
The Hong Kong government is now lobbying the mainland to introduce a new connect programme, which will provide risk management-related financial products, Paul Chan, Hong Kong’s financial secretary said.
“Foreign investors utilising channels in Hong Kong to invest in the mainland would have more options to manage risks,” he said, adding the new scheme will be an enhancement to the territory’s Stock Connect launched a decade ago.
The three-day HSBC summit in Hong Kong kicked off on Monday, bringing together over 2,000 delegates, as authorities try to attract international visitors after three years of COVID restrictions.
The summit started in the former British colony a day after the Rugby Sevens tournament, one of several high-profile events in the special administrative region this year.
The events come against the backdrop of concerns expressed by some lobby groups and diplomats about the uncertain outlook for political and civil liberties after China imposed a sweeping national security law in 2020.
The outlook for Hong Kong as a financial centre is crucial for London-headquartered HSBC, which makes the bulk of its profit from the city, where its shares are listed and which is also the bank’s regional headquarters.
HSBC Chairman Mark Tucker said that Hong Kong would continue playing its role as a global financial centre due to its vast capital markets, the strong commitment to maintain the common law system, and a “rock-solid” U.S. dollar peg.
(Reporting by Selena Li and Dorothy Kam; Editing by Sumeet Chatterjee and Stephen Coates)
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