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HK's debt market - high-flyer in the services sector : FS
The Financial Secretary, Mr Donald Tsang, said today (Tuesday) that the Government aimed to develop a world-class debt market infrastructure in Hong Kong to sustain the territory's attractive investment environment well in the next century.
Speaking at the Annual Dinner of the Hong Kong Institute of Investment Analysts, Mr Tsang pointed out that the thriving debt market in Hong Kong had built up within a relatively short period of time a critical mass for further development within a relatively short period of time.
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Although the size of the debt marketmarket was small compared with the equity market and the banking sector, the total outstanding public and private sector debt issues had increased by eight-fold, from about $27 billion at end 1989 to $236 billion at end-September 1996, Mr Tsang said.
"In anticipation of these opportunities, the Government has done its part in paving the way for the take-off of our debt market," Mr Tsang said.
Actions taken to date included the launching of the first batch of 10-year Exchange Fund Notes; provision of an efficient central clearing and settlement system; upgrading of payment and settlement system; and lessening of the tax burden on the issue of high quality debt instruments.
The Financial Secretary emphasised that Hong Kong would continue to apply the philosophy of allowing the private sector initiatives to be the guiding force for the development of the market.
Mr Tsang said two new Government initiatives were in the pipeline. He told the audience that the Mandatory Provident Fund (MPF) System and the Mortgage Corporation would immensely benefit Hong Kong's debt market both on the demand and supply sides.
He said that the estimated annual contributions under the MPF System would amount to about $30 - 40 billion.
"This large pool of reserves will filter into demand for various investment vehicles. In particular, there will be demand for instruments that can produce a steady stream of income over the medium to long term to match the underlying retirement liabilities."