"We are doing a financial conference here because London is the place to be,” said KC Chan, secretary for financial services and the treasury of the Hong Kong Special Administrative Region, in a speech that kicked off the event.
“London has always, in my mind, led the global financial markets. It is a trend-setter in financial services, an innovator of financial products, and has always been a benchmark maker when it comes to financial market regulation.”
Chan and his colleagues then proceeded to spell out a few reasons why London might have cause for concern about its leadership position.
‘No plans to change US$ peg’
The recent and rapid emergence of renminbi (RMB)-denominated financial products in Hong Kong was mentioned by a number of the speakers during the course of the event, but Eddie Yue, deputy chief executive of the Hong Kong Monetary Authority, went out of his way to reassure his audience that “we have no plan to change the US dollar peg in Hong Kong”.
“It has served Kong well since 1983, and it is the pillar of our stability,” Yue added.
Part of a series
Hong Kong officials are no strangers to London or its conference rooms yet today’s event was described as significant for its scale, and as representing the beginning of a new, global campaign by Invest HK – a promotional organisation – to raise awareness of the former British colony as a financial centre and asset management hub. A similar conference is scheduled for New York in March, the organisers said.
Martin Wheatley, chief executive of the Hong Kong Securities & Futures Commission, stressed how strongly Hong Kong was bouncing back from the 2008 financial crisis.
Assets under management are not yet back to their 2007 peak, but they have made significant progress in that direction, he said.
“You’ve heard about Hong Kong’s role as a gateway to China, and clearly that has been one of its roles, but what is less well understood is that it’s a two-way flow, this gate,” Wheatley, a former executive of the London Stock Exchange, said.
“It’s not just money moving in one direction, now it’s very much a two-way flow. And just as we’ve got the world’s funds seeking to grow their allocations to Asia, we have also got a flow of funds and expertise coming out of the mainland.
“So more and more, what we’re seeing today is not just the flow of capital looking to support the growth of [China’s] economy, but the outpouring [from China] of fund managers, banks, brokers and money, moving into Hong Kong and looking for investment opportunities.”
Wheatley noted that Fidelity International’s Anthony Bolton was just one of a number of well-known names to make news in Hong Kong recently. Bolton, of course, has famously relocated to the city to manage a new China Special Situations Fund there, acquiring an apartment overlooking Victoria Harbour that was reported by Bloomberg Markets Magazine to have cost HK$72.8m ($9.38m).
McDonald’s, which in September became one of the first issuers of renminbi bonds in Hong Kong, is another well-known name to show up in Hong Kong, Wheatley said, as is that of George Soros, who earlier this month was reported to have opened a Hong Kong office for his hedge fund.
Still another is John Ho, the founder of Hong Kong-based hedge fund manager Janchor Partners and a former Asia-based star of The Childrens’ Investment Fund.
“We’ve seen a huge number of hedge funds looking to establish themselves and grow up their businesses in Hong Kong and into China and the rest of Asia,” Wheatley said.
"We have the most hedge fund managers we’ve ever had in Hong Kong, around 300, and the numbers of hedge fund applications that the [UK] Financial Services Authority say they are seeing are very similar to the numbers that we’re seeing.”
Wheatley said long-short strategies are by far the most popular in Hong Kong, as fund managers seek to take advantage of the jurisdiction’s relatively relaxed approach to shorting.