Hong Kong's securities and futures regulator said it will review how it positions the city to attract more fundraising activities and lean on technology and environmental, social and corporate governance products to remain a world-class financial center.
Boosting the competitiveness and appeal of its capital markets will be one of the key priorities of the Securities and Futures Commission (SFC) of Hong Kong, according to the regulator's three-year plan released Jan. 23.
"Shifting tides in the global markets, geopolitical tensions and technological advances have brought both unprecedented challenges and opportunities to the financial markets of Hong Kong," the regulator said in a statement. "We recognize the concerns of industry participants across our markets, as well as the need to work with them to address the risks and harness the opportunities."
Hong Kong, seen by global investors as a gateway to mainland China, is facing the brunt of investor anxiety over the troubles in the real estate and local government financing vehicle (LGFV) sectors of the world's second-biggest economy. The city slipped to sixth place among major stock exchanges in the world by the dollar value of total funds raised via initial public offerings (IPOs), from third in 2022, according to a ranking by KPMG. Hong Kong's benchmark Hang Seng Index crashed 12% in the first two weeks of January, extending a four-year falling streak.
Global financial center
The regulator said it will review its positioning to enhance its IPO fund-raising capability and take forward the recommendations by its Taskforce on Enhancing Stock Market Liquidity, established in August 2023. It will deepen its connection with capital markets in mainland China by expanding their mutual market access programs, and introduce more mainland China-related derivative products in Hong Kong to increase its competitiveness in risk management.
The Hong Kong regulator will also explore cooperation or connect programs with its overseas counterparts, it said.
"Hong Kong needs to stay competitive on multiple fronts, especially by upholding its status as an international asset and wealth management hub and global fund-raising center, to fully leverage its strengths in supporting Hong Kong's and Mainland China's market development," the SFC said.
Hong Kong will encourage development of regional corporate sustainability disclosure standards, stem greenwashing and nurture sustainable finance talent, it said.
The SFC will also advance regulation of virtual asset trading platforms by giving guidance to new virtual asset activities and take measures to safeguard investor interest while embracing tokenization of traditional products as it seeks to foster a responsible and secure fintech ecosystem in the city.