Hong Kong chief executive Carrie Lam called 2020 a year «we will never forget» due to the challenges of the pandemic but believes 2021 could see a rebound with many opportunities ahead for the financial sector.
Hong Kong’s economy in 2020 is expected to contract 6.1 percent, worse than the global decline of 4.4 percent, according to Lam during the 14th Asian Financial Forum (AFF) which is being hosted virtually this week.
«[2020 is] a year we want to forget and know, we will never forget,» said Lam at AFF’s opening session, highlighting major changes in day-to-day life such as masks, social distancing and coronavirus testing.
«That said, vaccinations have begun in some nations and economies and will soon spread across the world, Hong Kong included. They will offer hope for us all. indeed, if the vaccines are as successful as we expect, there will be real momentum for recovery in the second half of this year.»
Hong Kong: Strong and Resilient
Despite the challenges, Lam noting the resilience of the city’s financial system, most notably highlighting the U.S. dollar peg and the relative strength of the Hong Kong dollar throughout the year.
«We continue to see enormous opportunities when the pandemic is over thanks to our strong fundamentals and unique advantages as the international financial center of China and one of the world’s major financial cities.»
«Ideal Gateway»
On the outlook for Hong Kong as a bridge to China, Lam noted that the city remained «an ideal gateway between the mainland and the rest of the world» highlighting access to Chinese issuances, offshore renminbi growth and onshore opportunities for wealth management firms via the Greater Bay Area initiative.
«That's thanks to our 'one country, two systems' framework and longstanding advantages including an internationally aligned regulatory regime, the rule of law, a simple and low tax system and the free flow of information and capital,» she explained.
«We continue to be an ideal gateway between the mainland and the rest of the world. That very much includes our role as both a conduit for foreign capital investing in the mainland and a springboard for mainland companies looking to international markets.»
Financial Upgrade
Lam shared about the government’s ongoing focus in enhancing Hong Kong’s financial sector, underlining effort related to regulatory relaxation for REITs and tax concessions for private equity.
Lam also highlighted family offices as a major focus with the introduction of a dedicated team that will promote Hong Kong’s advantages and offer a range of support services for those interested.
Insurance Hub
In addition to banks and asset managers, Lam also spoke about positioning Hong Kong as a risk management center «for countries and companies along the Belt and Road».
Benefits to drive growth include the halving of profit taxes (8.25 percent) for those related to marine and specialty insurance, loosening for issuance of insurance-linked securities by special purpose companies and an enhanced framework for multinational insurers.
Innovation and Tech
Growth aside, Lam also stressed the importance of technology, innovation and sustainability for the future of Hong Kong’s financial sector. On the latter topic, she reiterated the government’s commitment to carbon neutrality by 2050 and increasing focus on sustainable investments, finance and certification.
And on technology, she cited the city’s 600 fintech firms and startups – including eight digital banks, four digital insurers and a virtual asset trading platform – as proof of ongoing growth and development.
«Innovation and technological advancement are priorities of my government and they will power the future of our financial services sector,» Lam said.
