weekly
Written by: Chen Yunlin
2020-04-21 17:00
Last update date: 2020-04-21 17:00The Financial Secretary, Chen Maobo, announced in the Budget that he accepted the recommendation of an expert group composed of leaders from the financial and business sectors to plan to allocate a tenth of the amount (approximately 22 billion yuan) from the 220 billion future fund managed by the HKMA ), Inject a long-term investment portfolio called "Hong Kong Growth Portfolio" to directly invest in Hong Kong-related projects, hoping to strive for higher returns, consolidate Hong Kong's position as a financial, business and innovation center, and enhance Hong Kong's productivity and competitiveness in the long run, It is expected to pay off in five years.
To undertake the above: [Future Fund. Up] Unclear direction and unclear questions Three questions "Hong Kong version of Temasek"
In 2015, the then Financial Secretary Zeng Junhua allocated 219.7 billion yuan from the "Land Fund" to set up a 10-year "Future Fund". What has been the return so far? (Profile picture)
three. Will the so-called "Hong Kong version of Temasek" be reduced to "four dissimilarities"?
What is "Hong Kong Growth Portfolio"? According to the report of the Expert Panel, Hong Kong ’s growth portfolio will invest in companies, projects or funds that are “related to Hong Kong” such as Hong Kong ’s new economy, biotechnology, innovation and life technology, and formulate two to three authorized areas, such as medical, technology, etc. New economic projects, including investment in private equity funds and venture capital, but should not invest in real estate companies or projects in Hong Kong. Hong Kong ’s growth portfolio will be managed separately from the Hong Kong official investment fund and the Exchange Fund, to prevent conflicts of interest among senior officials, and to disclose basic information such as its governance arrangements, investment objectives, first appropriation, and long-term returns. "Growth portfolio" is "Hong Kong version of Temasek".
For many people, Temasek is a quite successful brand in Singapore, and Singapore and Hong Kong have similar development levels and economies of scale. Temasek may be worth learning from, but in terms of scale, the future fund cannot be compared with Temasek. The government With only a tenth of the future fund, the scale is obviously different from that of Temasek, which has a portfolio of US $ 231 billion (about HK $ 1.801 billion). However, Deng Xiwei believes that the relatively small amount of 22 billion yuan is a good start. "Excluding the management principles and policies of the HKMA, the activity space is much larger, and more local economic investment can be made, especially High-risk but rewarding high school SMEs, start-ups such as biotechnology, AI, online education. "Deng Xiwei suggested that in response to the amount of funds invested in projects of corresponding scale, such as providing seed funds for small and medium-sized high-tech projects, Can play a role in promoting. "When the amount is so small, it should be more market-oriented and make some investments with high returns, high risks, and social benefits." He said that if the scale is getting bigger, you can invest directly in overseas companies, bring back talent, and promote Hong Kong Economic development.
Deng Xiwei also pointed out that this 22 billion usage should not run counter to the population and industrial policies. If the fisherman casts a net, it will only be "four different." He took the example of assisting the transformation of the tourism industry among the four pillars, "Tourism (GDP) accounted for a small proportion of itself, but under a series of social movements and epidemics, the industry has become unstable and the epidemic has not ended. Delegates will recover, so it may be necessary to consider transformation. In addition to relying on free travel for shopping in Hong Kong, can local tourism engage in in-depth and cultural tourism? "
It is not new for Hong Kong to have no long-term population and industrial policies. It is worthwhile to make good use of huge reserves to promote change, and strive to increase returns and diversify risks. However, Deng Xiwei also does not forget to add that future funds and local industrial policies need not be conflated: The government has no economic policy and long-term economic considerations, but this does not mean that a sovereign fund has to be established to achieve industrial policy. There are many other methods, such as direct investment. "
Deng Xiwei believes that the fund's investment projects should not be disconnected from economic development. (Photo by Huang Shuhui)
The details of the "Hong Kong Growth Portfolio" have not yet been finalized, and there are still many questions to be answered in the specific operation. However, "high growth" is always an empty saying. How to choose investment targets? Huang Yuanshan said that Singapore ’s approach is to first draw up plans for the next three to ten years, and then start to outline the blueprint for industrial development in terms of population and education, so as to screen strategic industries. "But Hong Kong has neither an overall blueprint nor an industrial policy, so It is difficult for you to answer which industry is the most strategic. "
Singapore actively promotes the fourth industrial upgrading and transformation. The government ’s 2016 budget of 4.5 billion industrial transformation plans, which formulated the "Singapore Industrial Transformation Blueprint", to develop a transformation blueprint for a total of 23 business sectors in six areas, such as Logistics, food manufacturing, precision engineering, etc., covering about 80% of the local economy, improving productivity, employment skills, promoting innovation and moving towards trade and internationalization, and handed over to the Singapore Council for Skills, Innovation and Productivity (Council For Skills, Innovation and Productivity) )Be responsible for. The Singapore Future Economic Commission (CFE) published a research report "Report of the Committee on the Future Economy Pioneers of the next generation" in March 2017, proposing economic development strategies for the next ten years, and ensuring the future by developing and implementing blueprints for industrial transformation Over the past ten years, there has been an average annual economic growth of 2% to 3%. The report also pointed out that the government is not just about winning and losing, but according to different industry levels, to provide the best transformation opportunities for enterprises and employees in the open market. Therefore, the responsible department will make plans based on the specific needs of the industry and work with relevant unions. And organization and communication; the government also has a responsibility to provide the industry with a more favorable environment for transformation, such as revising regulations and formulating national standards, to promote the application of technology.
Although Hong Kong does not have a macro overall blueprint, society believes that investing in high-tech is one way out, and investing in innovative technology industries is also a general trend. Huang Yuanshan admitted that he does not object to this, but the question is, how to choose energy in the field of high-tech An investment project that will transform the economy and improve its overall competitiveness? "This requires enough blueprints and ideas to do it."
In 2009, the then chief executive Donald Tsang proposed in the Policy Address to consolidate the four pillars and develop the "six dominant industries" (cultural, creative, medical, educational, innovative, testing and certification, environmental protection), such as referring to the latest GDP , Financial services (19.7%), tourism (4.5%), trade and logistics (21.2%), professional services and other industrial and commercial support services (12.0%), together accounted for 57.3%, the six major industries still accounted for less than 10%. In 2018, the government announced "Hong Kong 2030+: Planning Vision and Strategies Across 2030". The document analyzes the challenges faced by the population, economy and other fields, and proposes the government's vision, policies and strategies for the future development of Hong Kong. A livable, competitive and sustainable "Asian International City", it has little or no clarity on the direction of the future economy.
Hong Kong's industrial structure is now single, and there is no clear direction for future economic development. How can the "Hong Kong Growth Portfolio" explore suitable investment opportunities? It is not always possible to imagine that projects to be invested will not be out of touch with economic development.
Different processing methods will lead to different results. The "Hong Kong Growth Portfolio" not only seeks to change a single industry, but also promotes the upgrading and transformation of the entire economy. Huang Yuanshan gave an example: "The financial industry accounts for a large proportion of the Hong Kong economy, and fintech (fintech) is only a small part of the whole pie. The upgrading and transformation of the entire financial industry is not the same. "For the government, how to develop from a single industry to transform into an entire industry to upgrade and transform or promote new industries requires research and answers.
Is the government launching the Future Fund to prevent Jigu from hunger, or to achieve long-term economic development? In the latter case, the rate of return on investment is only one of the criteria for the effectiveness of the fund. In addition to economic returns, it promotes changes in the economic structure, and social returns are also worth paying attention to. Huang Yuanshan expects the government to invest 22 billion yuan in funds for local companies to seek greater opportunities for the Hong Kong economy Space for development: "It gives Hong Kong fundamental and comprehensive benefits, not just making money, but making the local economy better."
How was the Temasek myth created?
At present, many governments have invested in the establishment of the "Sovereign Wealth Fund" (Sovereign Wealth Fund), which is used to stabilize exchange rates, savings, development, retirement protection, or to pay government expenditures when the economy fluctuates periodically. In the past decade, the number of sovereign funds has soared. As of September last year, there were 94 sovereign funds in the world, more than 50% more than 60 in 2010, and 65 of these regional countries have more than one sovereign fund. The IE Center for Governance of Change published the "2019 Sovereign Wealth Fund Report", proposing that more and more sovereign funds tend to invest directly. In the first nine months of 2018 to 2019, Singapore ’s Temasek and Singapore Government Investment Co., Ltd. (GIC) is the most active, with the two directly investing in 82 and 58 projects, respectively, accounting for more than 50% of sovereign fund transactions during this period. According to the report, the investment projects of sovereign funds in recent years have been mostly venture capital, and most of them have invested in biomedical technology, fintech, e-commerce and energy industries. They hope to bring high returns through technological innovation and at the same time make the national economy develop more diverse And even provide solutions to social problems. There are many sovereign funds. Why is it that Marsh is a myth?
The Singapore government divides its fiscal reserves into three: the Singapore Monetary Authority, Temasek Holdings and GIC. The former is a central bank that focuses on low-risk and high-liquidity investments. The latter two are controlled and funded by the government, but are commercial Private companies operating in principle, managing long-term return portfolios and stock investments separately.
Established in 1974, Temasek is a strategically developed sovereign fund. It has its own board of directors and investment management team. At the beginning of Temasek, the Ministry of Finance of Singapore transferred 35 companies with a total value of S $ 354 million to Temasek. The current scale ranks 13th in the world. Cooperating with the government's industrial policies, enhancing the profitability and competitiveness of enterprises is Temasek's main role. Therefore, in addition to seeking long-term returns, Temasek will directly participate in local investments in energy and transportation, such as holding strategic industries such as Singapore Telecom and Singapore Airlines. Many of the company's shares are expected to expand its industrial footprint and drive economic growth. It was only in 2002 that Temasek made a global investment and began to invest in enterprises in the Asian region and member countries of the Organization for Economic Cooperation and Development (OECD), preferring financial services, telecommunications media, technology, transportation and industry. Currently, local and overseas investment agreements Three to seven ratio. GIC, which was established in 1981 as a subsidiary of Temasek, was later spun off and independent. GIC mainly used fiscal surplus and public funds to pursue long-term investment returns and diversified investments around the world. Temasek is compelling because it controls Singapore ’s key economic lifeline, plays a leading role in the local economic development, and has a good return on investment. The ten-year shareholder ’s compound annual return rate is 9%.
The above excerpt is from the 210th issue of "Hong Kong 01" Weekly Report (April 20, 2020) "Three Questions on" Hong Kong Version of Temasek ""
More weekly articles:【01 Weekly News Page】
The "Hong Kong 01" weekly newspaper is available at major newsstands, OK convenience stores and Vango convenience stores. You can also subscribe to the weekly report here to read more in-depth reports.
01 Weekly report in-depth report Temasek Singapore Budget Exchange Fund Hong Kong Foreign Exchange Reserve