Economist Report : Mainland Has Opportunities for HK Finance

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Last updated at: (Beijing Time) Monday, March 25, 2002

Economist Report : Mainland Has Opportunities for HK Finance

China's liberalizing of market at a faster-than-expected speed means opportunities for Hong Kong financial companies, according to a report released by the Hong Kong Trade Development Council Monday.

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China's liberalizing of market at a faster-than-expected speed means opportunities for Hong Kong financial companies, according to a report released by the Hong Kong Trade Development Council Monday.

"China needs to nurture the financial markets to support the country's long-term economic development," said the council's Chief Economist Edward Leung, the writer of the report.

China's financial markets are underdeveloped, characterized by overly dependence on bank loans in corporate finance and under- development of consumer credits, said the report entitled "China's WTO Accession: On The Fast Track"

The report identifies opportunities and challenges for Hong Kong companies in the sectors of banking, fund management, insurance, securities and venture capital in this emerging market.

For banks, the report pointed out that Hong Kong banks might have difficulties in competing with their mainland counterparts in mass market and therefore should focus on providing customized services to higher income customers.

In the area of commercial banking, Hong Kong banks are advised to rely more on local expertise than its size to win business, most probably from smaller enterprises.

Geographically, the report advised Hong Kong banks to focus on the Pearl River Delta (PRD) and Shanghai, largely due to Hong Kong 's heavy investment there.

According to the report, Hong Kong is increasingly important not only as a base for foreign funded houses to expand their presence in the mainland, but also as a base for mainland funded houses to accumulate international management capability.

The report therefore advised Hong Kong-based investment bankers to further enhance their asset management and investment banking services in anticipation of the emerging business opportunities.

For the insurance sector, the report said most Hong Kong's indigenous insurance companies could not meet the minimum total asset and experience requirement. However, insurance professionals would have ample opportunities as there would be a surge in demand for qualified professionals in the mainland.

For the securities sector, the report said mainland's securities market was set to take off, as enterprises would increasingly raise funds from the securities market, instead of overly relying on bank credits.

Hong Kong companies are advised to form partnership with prominent foreign players to assist established mainland companies to list in Hong Kong.

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