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Chapter 4

Financial and Monetary Affairs

Hong Kong is a key global financial centre. It ranked third of 80 financial centres in the latest Global Financial Centres Index and the stock market ranked second globally in terms of funds raised through initial public offerings in 2014. Hong Kong has the world's largest pool of offshore Renminbi (RMB) liquidity of over RMB1.1 trillion. The financial sector has a 237,800-strong workforce - 6.3 per cent of the city's total workforce - and contributes 16.5 per cent of the city's Gross Domestic Product. The launch of the Shanghai-Hong Kong Stock Connect marks an important milestone in the mutual market access between the Mainland and Hong Kong.

Hong Kong as an International Financial Centre

Overview

Hong Kong holds a unique position in the increasingly integrated global financial system. It enjoys extensive geographical, cultural and linguistic links with the dynamic Mainland economy, and has long offered seamless connections between the Mainland and the rest of the world. At the same time, Hong Kong's location at the heart of Asia forms a 24-hour continuous trading system together with New York and London. Hong Kong's position as the leading international financial centre in Asia is further fortified by the strong links with the whole Asia-Pacific region and excellent communications with the rest of the world; the rule of law; a level playing field for conducting business; and a sound regulatory regime. The absence of restrictions on capital flows into and out of Hong Kong and strong protection for investors are other advantages.

Hong Kong's financial markets operate under effective and transparent regulations, which are in line with international standards. A well-educated workforce and ease of entry for professionals from outside Hong Kong ensure availability of talent, and this and the highly liquid market are also conducive to the operations of financial institutions in Hong Kong. Hong Kong's competitiveness as an international financial centre is well recognised: the Global Financial Centre Index published by Z/Yen Group in September 2014 ranked Hong Kong as the third global centre, behind only London and New York.

The International Monetary Fund's (IMF's) Financial Sector Assessment Programme, in an assessment report published in May, acknowledged that Hong Kong's financial sector was one of the largest and most developed in the world and was well regulated and resilient, with the capacity to withstand a diversity of large and global shocks. The IMF also recognised the continuing efforts made by the government and the regulators in strengthening and upgrading Hong Kong's financial infrastructure and regulatory framework.

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