SFM Offshore

John Tsang Chun-wah, the financial secretary of Hong Kong made a presentation at the Annual Convention of Hong Kong Investment Funds Association.  He looked at how Hong Kong’s asset management sector will be supported by China’s 12th Five-Year Plan, China’s blueprint and action agenda for economic and social development for the 2011-15 period.

He explained that the nation’s 12th Five-Year Plan adopted in March this year clearly supports the growth and development of Hong Kong as an offshore Renminbi business center and an international asset management center. Mr. Tsang noted that Hong Kong had been given a spearhead role in the internationalization of Mainland China’s currency, the Renminbi, which would help the country continues its changes and opening up policies.

The financial Secretary added that Hong Kong is actually the perfect testing area for Renminbi (RMB) products. By the end of August 2011, total exceptional RMB deposits in Hong Kong came to some RMB610bn (USD96bn), nearly a tenfold raise since 2009.

On top of that, by September 2011, there had been 95 RMB bond issues, adding up to around RMB160bn, while, within the first eight months of this year, more than RMB1 trillion worth of Mainland deal was settled in Hong Kong (more than 80% of the full buy and sell settled in RMB).

Tsang remarked that, throughout his recent trip to Hong Kong, China’s Vice-Premier Li Keqiang had declared new initiatives, such as allowing investments within the Mainland equity market through the RMB Qualified Foreign Institutional Investor plan, and also the release of an exchange-traded fund with underlying Hong Kong stocks on the Mainland.

He was certain that these actions would not only facilitate the growth of Hong Kong as an offshore RMB center, but in addition helps promote the expansion of the SAR’s asset management industry. Hong Kong’s authorities will continue to promote a beneficial environment for that growth.

He confirmed that Hong Kong’s combined fund management business now greater than HKD10 trillion (USD1.3 trillion); that currently two-thirds of funds are coming from non-Hong Kong investors; and that Hong Kong continues to be a recommended location for offshore fund managers in Asia, thanks to its most important advantage of proximity to the Mainland and well-defined status as a world-wide financial center in the Asian time zone.

Tsang revealed that, to improve Hong Kong’s economical structure, the government is preparing legislative changes to update the trust law. It is hoped, he said, that it “will encourage more local and overseas settlers to choose our jurisdiction as the governing law of their trusts and administer their trusts in Hong Kong. We intend to consult the trade on a draft Trust Law Bill in the first quarter of 2012.”

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