SAR in top role to bridge funding gap

Hong Kong is well positioned to bridge the existing funding gap in the Silk Road Economic Belt and the “21st Century Maritime Silk Road project — the “Belt and Road” initiative — says Hong Kong Exchanges and Clearing Ltd Chairman Chow Chung-kong. The city is both trusted by mainland enterprises and international companies, he told China Daily.
Speaking on the sidelines of the China Daily Asia Leadership Roundtable on Thursday, the city’s bourse chairman reckoned Hong Kong was in a good position to meet funding requirements related to the “Belt and Road” initiative.
“Although various financial institutions have been set up for the ‘Belt and Road’ initiative, such as the Asian Infrastructure Investment Bank, the Silk Road Fund and the New Development Bank, these organizations alone are not adequate to provide sufficient funding … if the ‘Belt and Road’ initiative is to reach its full potential,” Chow said. He said commercial-sector engagement and smart money in the capital market must be involved.
Chow suggested Hong Kong can play a variety of funding roles related to the “Belt and Road” initiative. Hong Kong-based banks can facilitate funding related to “Belt and Road” projects through bank loans, syndicated loans and project financing.
As a major center for generating capital for mainland firms as well as international companies for many years, Hong Kong can also play a role in bond issuances and equity financing, he said.
In Chow’s view, Hong Kong is the most efficient and international financial center in Asia. The city was best-equipped to play a role in international financial transactions related to the “Belt and Road” initiative, being a convenient and trusted location by all concerned parties, he pointed out.
“Mainland enterprises trust us because we are part of China; international conglomerates also trust us because of our rule of law tradition and clear world-class regulatory practices,” he added.
The “Belt and Road” can also help accelerate yuan internationalization. Hong Kong possesses the greatest pool of renminbi which will be the currency commonly used in “Belt and Road”.
In the context of the “Belt and Road” initiative, various market connection measures launched recently — the London-Hong Kong Connect announced in October, the Shanghai-Hong Kong Stock Connect launched last year and the proposed Shenzhen-Hong Kong Stock Connect — will expand the ambit of the renminbi from a trading currency to functioning as a capital account currency as well, Chow said.

Source: http://www.chinadailyasia.com/2015-10/30/content_15337046.html