Over the past few decades, amid fierce regional and international competition, Hong Kong has emerged as one of the world’s leading international financial centres.
This success is largely due to the solid support from our country, the rapid development of the region, and Hong Kong’s unique advantages.
Consistently ranked high in international indices like the Global Financial Centres Index, Hong Kong has mostly held the third spot globally since 2007. However, in the latest report, Hong Kong slipped to fourth place, sparking discussions despite an increase of 10 points in its overall rating.
The Pandemic’s Impact on Connectivity
While Hong Kong’s overall strengths in banking, insurance, professional services, and trade remain formidable, pandemic-induced restrictions affected external perceptions, likely impacting the ratings. The competition among global financial centres has intensified, with narrow rating gaps among the top-ranking cities.
Strategic Focus for the Future
To stay competitive, Hong Kong must maintain a clear understanding of its strengths and address weaknesses with strategic policies. Efficient implementation is key to consolidating its position in the global financial landscape.
The Current Situation of Hong Kong’s Financial Markets
Economic Contributions and Stock Market Strength
Hong Kong’s financial services contribute significantly to its economy, accounting for USD 76 billion in 2020 or 23% of GDP—about 1.5 times Singapore’s contribution. With a market capitalisation exceeding $42 trillion and over 2,500 listed companies, Hong Kong dwarfs Singapore’s stock market in size and activity.
Foreign Exchange and Bond Market Leadership
While Singapore excels in multi-currency services for the ASEAN region, Hong Kong dominates as the largest offshore RMB business hub, holding 60% of global offshore RMB deposits. It also leads Asia in international and Mainland offshore bond issuance, accounting for 34% of the region’s total.
Growth in Green Finance
Hong Kong is a regional leader in green finance, with over US$31.3 billion in green bond issuances in 2021, representing one-third of Asia’s market. The government’s issuance of long-tenor green bonds showcases Hong Kong’s commitment to sustainable development.
Challenges and Opportunities
Global Economic Uncertainties
The risk of a global recession, driven by rising interest rates and geopolitical tensions, poses challenges to Hong Kong’s financial markets. Intense competition among global economies further complicates the landscape.
Institutional Advantages and Regional Growth
Dear Lykkers! Hong Kong’s unique position under the “One Country, Two Systems” framework provides unmatched institutional strengths. With the Mainland as the world’s second-largest economy and Asia’s growing prominence in the global economy, Hong Kong is strategically positioned to capitalise on these trends.
Looking Ahead
International Engagement and Events
The Global Financial Leaders’ Investment Summit and the “Global Investment Dialogue” seminar highlight Hong Kong’s efforts to strengthen its global financial network. These events will bring together top institutions to discuss investment strategies amid economic uncertainties.
Resilience Post-Pandemic
With eased COVID-19 restrictions, Hong Kong is steadily regaining its vibrancy as a global hub for finance, culture, and trade. Its dynamic city life, coupled with natural and cultural attractions, positions Hong Kong as a destination full of opportunities and promise.
