Hong Kong urged to boost capital flow with mainland China for global market access

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Former HKMA head Norman Chan says capital circulation is not as seamless as it used to be

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Norman Chan Tak-lam, the former CEO of the Hong Kong Monetary Authority. Photo: Xiaomei Chen

Yuke Xiein Beijing

Published: 7:30pm, 20 Nov 2024

A more liberal exchange of capital between the mainland and Hong Kong should be facilitated to enhance the city’s international competitiveness and allow China to participate more freely in the world’s markets, panellists told the China International Finance Forum on Wednesday.

“We need stronger policy initiatives to support freer capital flow between Hong Kong, the Greater Bay Area and the rest of the mainland,” said Norman Chan Tak-lam, the former CEO of the Hong Kong Monetary Authority (HKMA). “Innovation in this area is essential as we navigate the profound changes of our time.”

At the event, held at the Ritz-Carlton hotel in Kowloon, Chan said capital circulation – external and internal – is not as seamless as it used to be given the changes occurring in the international geopolitical and economic landscape.

“We need to rely on external circulation by strengthening the link between Hong Kong and mainland hubs like Shanghai and Shenzhen,” he said. “I think this is a direction we need to seriously consider moving forward.”

Chan’s remarks came after China’s securities regulator said on Tuesday that it planned to “steadily widen the openings in the commodities and financial futures market” to global capital, furthering the effort to improve connections with Hong Kong and global financial markets.

Chan’s comments were echoed by Charles Li Xiaojia, the former CEO of Hong Kong Exchanges and Clearing and co-founder of the small business financing platform Micro Connect. He warned that Hong Kong is “unlikely to see a significant influx of global capital in the current climate” and it must exploit its role as a gateway for Chinese wealth to secure a “baseline allocation” from global investors.