Financial news
Written by: Huang Jie
2020-01-06 17:15
Last updated: 2020-01-06 17:16Li Xiaojia, Chief Executive Officer of the Hong Kong Stock Exchange (0388), published a blog entitled "2020 is here, is Hong Kong OK?" As a "ten-year review" and "ten-year outlook" and answered "Is Hong Kong OK?" ? "This question.
Li Xiaojia pointed out that in the past 10 years, on the one hand, Hong Kong has enjoyed China's development dividend in the process of globalization, but on the other hand, this pearl of the East has not been able to effectively solve the long-standing social accumulation in Hong Kong through one country, two systems. Deep-level political and economic contradictions have brought unprecedented challenges to the great social practice of one country, two systems.
He pointed out that, on the surface, Hong Kong is no longer the city that has contributed the most to China's GDP, but if we slightly adjust our perspective on Hong Kong and focus on Hong Kong's unique contribution to the development of China's financial market, you will definitely agree that Hong Kong has in the past Decades have deservedly become the most important link connecting China and the world.
The most representative results of the past efforts of the Hong Kong capital market are the "three links and one support": the stock exchange, the bond exchange, the commodity exchange, the embrace of the new economy, and the reform of the listing system. Its ultimate goal is to achieve as much interconnectedness as possible through Hong Kong with money from China, "goods" (products) from China, money from the world, and "goods" (products) from the world.
Looking to the future, Li Xiaojia pointed out that for the financial market, especially the Hong Kong Stock Exchange, there are still four things to be done in the next ten years: three links (stock, bond, commodity) and one hold (embrace Technology, leapfrog development). But he emphasized that only by gaining China's trust can Hong Kong win.
Li Xiaojia pointed out that in the next ten years, the Hong Kong Stock Exchange will continue to manage the "three links" and "one support". ﹙Profile picture﹚
Full text of Li Xiaojia's blog:
Happy New Year! The pace of time is always so hurried, almost in an instant, we bid farewell to the turbulent twists and turns, sad and happy 2019. Before we can calm down, we have stepped into 2020 (Binocular Vision 2.0), which symbolizes perfect vision. Standing at the forefront of the past two decades, looking back at the ups and downs of 2019, we are so looking forward to using the sensitive vision of 2020 to see through the mist to understand the future, and answer the question of many friends silently thinking: Is Hong Kong OK?
Decade review
If we want to predict the future, we must look back at the past, especially the past ten years. If we want to see Hong Kong's problems clearly, we must use a global perspective, especially the evolution of Sino-US relations.
No matter how you look at it, the past decade has been a decade of miracles and contradictions. Several pairs of contradictions stand out:
• Globalization has ushered in an unprecedented climax, but it seems that it will soon enter a large ebb;
• The rapid development of science and technology has greatly enriched human material enjoyment and spiritual life, but it has also begun to show great impact and destructive power on modern politics, social ethics and information cognition;
• China and the United States have been deeply married for more than two decades, but in recent years, the trend of marriage hitting the rocks and breaking things seems inevitable;
• On the one hand, China ’s economic and social development miracle has amazed the world, but on the other hand, China ’s path choices in the way of state governance are increasingly divorced from western traditional political ideas and values, and it seems to have planted long-standing conflicts that are difficult to resolve Seed.
Deep in these tide of development, Hong Kong has unknowingly gone through the second decade after the reunification, and its mental course is also contradictory and tangled. On the one hand, Hong Kong has enjoyed China's development dividend in the process of globalization, but on the other hand, this pearl of the East has not yet effectively solved the deep political and economic contradictions that Hong Kong has accumulated for a long time through one country, two systems. A great social practice brings unprecedented challenges.
On the surface, Hong Kong is no longer the city that has contributed the most to China's GDP. The proportion of Hong Kong's GDP to mainland China has fallen from 27% in 1993 to 2.7% in 2018. Hong Kong's real economy has contributed to the rapid development of the Chinese economy. The importance is already very small. Because of this, whether Hong Kong can do it or not is often the subject of discussion.
However, if we slightly adjust our perspective on Hong Kong and focus on Hong Kong's unique contribution to the development of China's financial market, you will certainly agree that Hong Kong has deservedly become the most important link between China and the world in the past decade.
Statistics show that in the past ten years, the proportion of investment from Hong Kong in the actual utilization of foreign capital in mainland China has risen without decline, and has remained above 60%. Of the outbound investment of mainland China funds, investment through Hong Kong to the sea The proportion has remained above 60%. The unique contribution of the Hong Kong capital market to the listing and financing of Chinese companies and the introduction of foreign capital into the mainland A-share market is obvious to all. Since 1993, Hong Kong has been the preferred offshore financing centre for Mainland companies.
In the past 10 years, the total financing scale of new shares in the Hong Kong market exceeded HK $ 2.3 trillion, ranking first in the world, and most of them were financed by mainland enterprises. Especially in the past five years, Hong Kong's financial market has responded flexibly, repairing bridges and opening roads. Since the opening of the Shanghai-Shenzhen-Hong Kong Stock Connect five years ago, the inflow of northbound traffic has reached 1.01 trillion yuan, and foreign-invested shares have reached 1.44 trillion yuan. In more than 2 years, more than 3.8 trillion yuan of transactions have been concluded. The Hong Kong market has made full use of the advantages of one country, two systems, and acted as a translator and converter for China Unicom, creating important strategic value for China and winning continuous prosperity and wealth accumulation for itself.
The most representative results of these efforts are the "three links and one support" four things: stock links, bond links, commodity links, embrace the new economy, and reform the listing system. Its ultimate goal is to achieve as much interconnectedness as possible through Hong Kong with money from China, "goods" (products) from China, money from the world, and "goods" (products) from the world.
Li Xiaojia believes that Hong Kong's role will only be more prominent, not diluted, and will not be marginalized. ﹙Profile picture﹚
Ten-year outlook
How far can globalization go in the next ten years? Where is the extreme potential and boundary of technological development? Can China and the United States, a distant partner or adversary, join forces to tackle global challenges such as climate change and disparity between rich and poor? These issues will deeply affect everyone on the planet. For many Hong Kong people, the topic we are most concerned about is whether Hong Kong in the tide can get out of the haze of 2019 and create greater glories?
In the next ten years, the polarized world pattern of China and the United States has basically been shaped. Regardless of whether the world likes it or not, China's rise is irresistible; whether China likes it or not, it may have to continue to face the world supremacy of the United States. Many countries may feel that they will face a dilemma. Although the globalization trend is irreversible, it is still an open question whether the eastern and western markets can be integrated and compatible with each other. Technology will be more disruptive than ever. It will reshape the world economy and the global society. The vicious competition with the help of technology will also bring unprecedented destructive power.
In the next ten years, the polarization between China and the United States will bring greater geopolitical and economic development challenges. The world between the two poles will inevitably need translators and converters more than before. China and the world, especially the financial markets, seem to urgently need a "strategic buffer zone" recognized by both parties to achieve market connectivity and integration.
Therefore, in my opinion, Hong Kong's role will only be more prominent, not diluted, and it will not be marginalized. However, for every Hong Konger, no matter what kind of political spectrum you belong to, you must be soberly aware that Hong Kong can only win if you gain the trust of China; for the Mainland, only if the world recognizes Hong Kong's unique international Status, Hong Kong is likely to continue to help China succeed. Therefore, one country, two systems is the guarantee of Hong Kong's success, and "one country" and "two systems" are complementary and indispensable. If Hong Kong people are not soberly aware, they will renounce themselves and go to the end; if Mainland friends are not soberly aware, they may be emotionally involved and spill their children with bath water.
For the Chinese and international financial markets, Hong Kong's function as a translator and converter will be particularly important and urgent in the face of the high degree of uncertainty in the next decade. On the one hand, both the world and China urgently need China's financial market to be more open and more international; on the other hand, the huge size of China's financial market, its self-contained market structure and regulatory path determine that it is difficult for both sides Fully compatible and integrated under the premise of changing yourself. Therefore, Hong Kong will still be an extremely important part of China's capital market opening and internationalization process. We still have a long way to go.
For the financial market, especially the Hong Kong Stock Exchange, in the next ten years, we will continue to do four things: three links (stock link, bond link, commodity link) and one hold (embracing technology, leapfrogging development).
In terms of stock exchange, the spot exchange has been basically realized in the last ten years. What we have to do in the future is to upgrade, expand, and replace, from the spot exchange to the derivative product, and from the secondary market to the primary market. Products to make capital flow in and out more efficiently and safely.
In terms of bond exchange, three years ago, the Long March has just taken the first step of the bond-to-bond exchange in the inter-bank market in the north. The two-way intercommunication road is still long, but the demand will become more urgent. Only the deep interconnection of the bond market can It means that the internationalization of China's capital market is truly realized. In the future, we need to speed up the two-way communication process. First, we will start the two-way exchange of bonds in the exchange market. Through the introduction of multiple services such as repurchase, offshore settlement, and margin financing, we will improve the liquidity of the two bond markets and use technology to find a way to reshape the international Opportunities in the bond market to accelerate internationalization through various methods such as cooperation, joint ventures, and mergers and acquisitions.
In terms of commodity links, Hong Kong does not have the natural soil for the development of the commodity market. Primitive accumulation has been completed mainly through overseas purchases (LME) and mainland construction (QME) in the past ten years. In the future, what we need to work on is to replicate the stock exchange model to achieve commodity trading and clearing, and to link the prices of the Chinese commodity market and the international commodity market through product interlinkages to achieve "price communication" and accelerate the internationalization of on-shore physical delivery. . At the same time, we also hope to use technology to help reshape the trading and financing ecology of China's commodity markets.
One embrace is to embrace the scientific and technological revolution in an all-round way, expand new opportunities and explore new horizons through science and technology.
In "Strategic Planning 2019-2021", we propose to focus on the three themes of focusing on China, connecting the world, and embracing technology. Our China-based strategy still requires policy and regulatory drive, and we are confident that we can continue to move forward because these measures have great strategic significance for the country; our global connection strategy will continue to expand the layout of international cooperation and acquisitions; and At the same time, in the future, we will increasingly focus on the power of science and technology and use this new kinetic energy to connect China and the world more quickly and effectively. Therefore, we must have the courage to explore, trial and error, allow failure, and step by step to success.
2020 is here. Going back to the opening question, is Hong Kong okay in the next ten years? My answer is clear: Hong Kong is OK! Definitely! Let us bravely open up a whole new world with sunshine and dreams! I wish all friends progress in the new year and wish you all the best!
Li Xiaojia Hong Kong Economy