Financial services are central to Hong Kong’s economy, accounting for nearly a quarter of the city’s GDP and it is one of the biggest financial centres in the world.
The global economic environment, advances in Mainland China and policies of the Hong Kong SAR Government are driving rapid and profound change in Hong Kong, with innovation and technology, digitisation and green transformation coming to the fore.
The switch in emphasis need not lead to a decline in the relative importance of finance, rather it is likely to put the industry on a path towards an even more prosperous future.
In the 21st century, much of the entrepreneurial development in any industry occurs in start-ups, and InvestHK reports that Hong Kong has more than 500 fintech companies among some 4,000 start-ups.
The main aim of start-ups and their investors is to become a long-term, stable business and Hong Kong Stock Exchange owner HKEX has just launched a streamlined platform to facilitate IPOs.
Launched on 22 November, FINI (Fast Interface for New Issuance) is a cloud-based platform enabling different stakeholders, such as IPO sponsors, ranging from underwriters to regulators, to collaborate digitally when performing their IPO roles. HKEX said the platform would shorten the time gap between IPO pricing and trading, giving investors quicker access to new listings.
Neighbouring city and Guangdong-Hong Kong-Macao Greater Bay Area peer Macao has launched and innovative funding platform. Micro Connect Macao Financial Assets Exchange (MCEX) initiated its micro-financing exchange in August.
MCEX aims to bring global capital to the millions of SMEs in Mainland China through a new asset class the exchange created, Daily Revenue Obligations (DROs). The system blockchain-enabled system brings returns to investors from the revenue streams of the many invested SMEs.
Apart from taking technological advances on board, Hong Kong’s financial industry has become a world leader in backing innovative firms. Hong Kong is the largest IPO market for biotechnology companies in Asia and second-largest in the world after the United States. It remains one of the world’s most active IPO fundraising hubs, raising HK$105 billion (US$13 billion) last year, 65% of which was for the new economy sector.
Businesses worldwide are shifting towards sustainability, and much of this shift is technology driven. Recent advances in quality and drops in price for electric vehicles would not have been possible without related technological advances, which turned cars into power grids on wheels.
These green technologies in turn need innovative financing and Hong Kong has become Asia’s green finance hub. In October, Hong Kong SAR Financial Secretary Paul Chan said the city is already Asia's green finance hub.
“Last year, the total amount of green and sustainable debt arranged or issued in Hong Kong exceeded US$80 billion, up more than 40% compared to the year before, with green bond issuance accounting for about one-third of the market share in Asia.”
HKEX launched the CORE Climate carbon trading platform in October last year for settlement and trading of voluntary international carbon credits.
Hong Kong institutions and banks, including the Hong Kong Trade Development Council (HKTDC) were key drivers in establishing the Capacity-building Alliance of Sustainable Investment (CASI) at the COP28 conference in Dubai this month.
Fintech, innovative solutions, digitisation and green finance will be key issues at the Asian Financial Forum (AFF), which brings together financial leaders from across the world to discuss cutting-edge issues.
Organised by the Hong Kong SAR Government and HKTDC, AFF will be held on 24 and 25 January . Aside from panel discussions, the Forum features the Fintech Showcase, InnoVenture Salon and other themed zones showcasing a wide range of financial innovations, advanced solutions and revolutionary business ideas.