DBS expressed optimism about Hong Kong’s continued future as a financial hub and is actively increasing investments to capitalize on Greater Bay Area opportunities.
«The window for Hong Kong to continue as a financial hub to connect Chinese corporates to the world remains wide open,» said Andrew Ng, managing director and group head of treasury and markets at DBS, at a recent video conference.
In addition to its continued role as a gateway to China including imminent Chinese listing moving from the U.S., Ng also highlighted Hong Kong’s softer strengths that will help retain its hub status including its cosmopolitan nature and the diversity of talent across finance, technology and more.
«[The role of] Hong Kong as a financial hub will not diminish,» Ng reiterated.
If It Ain’t Broke
One of the key concerns about the sustainability of the Hong Kong regime is its local currency and its peg which has enabled stable convertibility to the U.S. dollar ($1 to HK$7.75-7.85) since 1983. DBS’s Ng was positive on the outlook of the peg, adding that the Hong Kong Monetary Authority had ample reserves to support the currency.
With regard to the impact of rising U.S.-China tensions, the bank also believes this is a non-event for the peg.
«Will US sanctions affect the peg? At the end of the day, you don’t really need to ask the U.S. for permission to peg the Hong Kong dollar,» Ng said. «Our view is this dollar peg has been working so many years and in the next five to 10 years, it's also of no interest for anybody to challenge that.»
Mainland Opportunity
On the Greater Bay Area, Ng was bullish about the opportunities from the megalopolis project with greater integration of the financial industry including the recently unveiled «Wealth Management Connect» cross-border scheme. DBS anticipates that initial stages will involve an expanded product universe which could the introduction of currency-linked products, unit trusts, equity-linked investments followed by structured products and hedge funds.
The bank is not only focused on cross-border opportunities with an application underway to open a securities joint venture in mainland China.
