Hong Kong as the International Financial Centre in Asia: Ways Forward

1
Hong Kong as the International Financial Centre
in Asia Ways Forward

• Prof. Stephen Cheung
• City University of Hong Kong

2
Contents

• Balance growth of financial markets
• Quality markets

3
Financial Market Development

• Equity market
• From 8th in 2005 to 6th in 2006
• Capital raised in 2006
• Bond market
• RMB dominated bonds
• Asian Bond Funds

4
10 Largest Domestic Equity Market Capitalization
at year-end 2006 and 2005
Source World Federation of Exchanges 2006 Market
Highlights
5
Capital Raised in 2006
By Share Issues (in million of USD) By Bond Issuance (in million of USD)
Australian SE 47,042.3 N/A
Hong Kong Exchange 65,015.8 8,351.9
Jakarta SE 1,823.1 N/A
Korea Exchange 5,281.3 400,667.9
New Zealand Exchange 1,014.9 1,504.5
Shanghai SE 16,760.5 N/A
Shenzhen SE 5,977.7 1,548.1
Singapore SE 5747.0 115,766.6
Thailand SE 3227.9 92,460.5
Tokyo SE N/A N/A
Nasdaq 17,374.9 N/A
NYSE 102,274.6 N/A
London SE 95,203.9 560,450.3
Luxembourg SE 35,209.8 1,320,246.1
Source Focus January 2007, World Federations of
Exchanges
6
Quality Market

• Listed companies
• Regulators
• Financial intermediaries

7
Corporate Governance

• Regional Comparison
• Comparison among listed companies in Hong Kong

8
Corporate Governance Quality Index
Source World Economic Outlook, September 2006
9
Year 2005

• Sample
• Use 5 OECD principles as benchmark
• Four main Hong Kong indices constituents as of
  12/31/2005
• HSI, HSCCI, HSCEI, HSHKCI
• Totally 174 listed companies in Hong Kong

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Improvement of CGI Compared with 2002
Improvement Frequency
-6-0 10
0-5 23
5-10 40
10-15 36
15-20 18
gt20 6






Mean of CGI increased by 16.14 compared with
year 2002.
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Improvement of CGI by Sections
Rights of shareholders Equity of shareholders Role of stakeholders Disclosure and transparency Board responsibilities
12
Opportunities

• Quality Market
• Better investor protection
• Better liquidity
• More quality companies
• Enhance the corporate governance of listed
  companies in China
• Toward the international financial centre in Asia