Hong Kong’s access to mainland China will be key in its ambition to develop an Islamic financial hub, Financial Secretary John Tsang said Tuesday.
“We are moving full steam ahead,” he told a two-day seminar on Islamic finance which was also attended by Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz and other central bankers from Gulf countries and the region.
Hong Kong announced its foray into Islamic banking late last year and Chief Executive Donald Tsang said yesterday he will lead a mission to three Middle East states – Kuwait, Saudi Arabia and United Arab Emirates – from January 25 to February 1.
John Tsang underlined Hong Kong’s intention to get a slice of the huge pool of the oil-driven liquidity in the rapidly growing Islamic funds valued at between US$700 billion and US$1 trillion, saying: “I believe Hong Kong can play an important role in generating new, reliable and potentially lucrative investment opportunities for this capital.”
Hong Kong, according to him, is aiming to be a wholesale player and in structuring Islamic products to seize on the global strong demand, including for sukuk or Islamic bonds.
“And China will be key,” he told the seminar co-organised by the Hong Kong Monetary Authority (HKMA) and the Malaysia-based Islamic Financial Services Board (IFSB).
“The unique advantage for Hong Kong is our access to the markets of the mainland of China. Hong Kong is the only jurisdiction outside of the mainland in which banks may transact in the reminbi.”
He pointed out that a quarter of the banks in Hong Kong are authorised to offer services using the Chinese currency and last year, Hong Kong was the first place outside China to offer a reminbi bond market.
The access to the mainland provides Hong Kong with the opportunity to develop syariah-compliant instruments for mainland-based issuers with Hong Kong as the bridge between the world’s fastest growing economy and the international Islamic finance market, he said.
To shore this up, he added, HKMA will apply to raise its status in IFSB to associate member from its current observer status.