05 July 2022
Over the last few days, we have seen much mention, discussion and analysis of Hong Kong since sovereignty was returned to the People's Republic of China. While there are various opinions, it pays to look at the statistics and the financials of this 25-year era. So, where does Hong Kong stand today compared to 25 years ago?
The support of China has been instrumental in the ongoing growth of Hong Kong as the leading APAC financial hub. While Hong Kong was a leading light 25 years ago, there has been massive growth in recent years. The region now boasts a banking system with combined assets totalling HK$27 trillion, more than treble the figure of 25 years ago. Over the same period, the bond market increased from $20 billion to an unbelievable $400 billion. As we enter a new era, Hong Kong is already embracing new initiatives such as green technology, carbon-neutral business models and raising funds for ethical investment.
When looking at the facts and figures, it is easy to forget, but over the last 25 years, we have seen monumental economic turmoil, brought on by:-
Over this period, the Hong Kong economy has more than doubled in size from HK$1.37 trillion to a staggering HK$2.86 trillion. Seen by many as a central trading point in the region, foreign trade has tripled to upwards of HK$10 trillion. This level of growth has been sustained by a flexible regulatory system, an accommodating political mindset and support from the Chinese authorities.
Those who follow the Hong Kong stock market will be well aware of the blossoming relationship with Chinese financial markets. In a controlled environment, we have seen the introduction of the "Connect" trading system. This allows Chinese-based companies to introduce secondary stock market listings in Hong Kong. This has several benefits:-
Reputation and awareness are essential when it comes to domestic and international companies. Access to the Hong Kong market, popular with global investors, has increased awareness and research cover for many companies.
Many investment bodies worldwide cannot invest in companies with limited liquidity. However, introducing the "Connect" trading system has enhanced awareness and, in many cases, introduced a new depth of liquidity.
This is something of a double-edged sword; on the one hand, overseas investors now have access to Chinese companies viatheir secondary Hong Kong stock market listings. On the other, Chinese countries now have the opportunity to tap global markets for future funding.
As we touched on above, not only has Hong Kong experienced massive growth across the board but it is also appreciative and flexible regarding new opportunities. For example, ethical investing and carbon-neutral business goals are seen by many as potentially huge markets going forward. These are areas in which Hong Kong is not only showinginterest but has already taken action. Consequently, it will be interesting to review the performance of Hong Kong over the next 25 years.Back to News