Page 114 - 2019 Special Report on the State of Business in South China
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Hong Kong Special Administrative Region
Economy market capitalization of Hong Kong’s stock market
reached US$4.35 trillion. In more recent years, the size of
Situated at the southeastern tip of Hong Kong’s asset management market has been rising,
China, Hong Kong is at the particularly with the help of a growing number of high-
center of East Asia. Since its return to the Mainland in net worth individuals settling in Hong Kong. In 2017, the
1997, the special administrative region has followed the total asset under management (AUM) of funds registered
“One Country, Two Systems” policy under the Basic Law, for sales in Hong Kong expanded by 29.4% year-on-year
its mini-constitution. Hong Kong is considered one of to US$1.66 trillion, with comparable growth among key
the world’s freest economy, and under its laissez faire categories such as equity, bond, and mixed-asset funds.
system its financial sector has developed to be one of the
centers in the region. In addition, Hong Kong continues Hong Kong follows a free trade policy and hence
to play a significant role as a portal for the Mainland’s maintains basically no barriers to trade: there are no
merchandize and capital flow. customs tariffs on goods imported into or exported from
Hong Kong. Import and export licensing are kept to a
According to the United Nations Conference on minimum. Most products do not need licenses to enter
Trade and Development (UNCTAD) World Investment or leave Hong Kong and where licenses or notifications
Report 2018, global FDI inflows to Hong Kong amounted are required, they are only intended to fulfill obligations
to US$104 billion in 2017, ranked 3rd globally, and under various international agreements, or to maintain
behind only the Mainland (US$136 billion) in Asia. In public health, safety or security. Therefore, while much
terms of outflows, Hong Kong ranked 3rd in Asia with of Hong Kong’s indigenous manufacturing capacity
US$83 billion, after Japan (US$160 billion) and the has moved to the Mainland since the 1980s, it remains
Mainland (US$125 billion). Most of these investment a trade hub with a significant share of merchandizing,
flow, remarkably, is due to its position as a portal to transshipment, and trade facilitation in the region.
investment flows into and out of the Mainland. Thanks
partly to this proxy position, Hong Kong was the world’s Recent Policies and Reforms
2nd largest investor and host in FDI stock in 2017, after
the United States. First introduced in 2003, the Mainland and Hong
Kong Closer Economic Partnership Arrangement (CEPA)
Hong Kong also benefits from being a financial center. allows qualified Hong Kong products, companies and
According to the Bank for International Settlements, residents to enjoy preferential treatment accessing the
Hong Kong is the 2nd largest foreign exchange market Mainland market.
in Asia and the 4th largest in the world in 2016, with the
net daily average turnover of forex transactions reaching Hong Kong and the Mainland signed two new
US$437 billion. This is in part due to Hong Kong’s agreements on June 28, 2017, namely the Investment
position as a hub for offshore RMB. According to SWIFT, Agreement and the Economic Technical Cooperation
Hong Kong is the largest RMB clearing center in 2017, Agreement (Ecotech Agreement) to further facilitate
sharing about 76% of the world’s RMB clearing activities. trade and investment. This follows the signing of ten
supplements and two agreements on trade in services
Meanwhile, Hong Kong’s stock market was ranked over the years. With the two new agreements, CEPA
the 3rd largest in Asia and the 6th largest in the world becomes a comprehensive free trade agreement
in terms of market capitalization as of end-2017. There (FTA) covering investment as well as economic and
were 2,118 companies listed on HKEx and the total technical cooperation on top of trade in goods and
114
Economy market capitalization of Hong Kong’s stock market
reached US$4.35 trillion. In more recent years, the size of
Situated at the southeastern tip of Hong Kong’s asset management market has been rising,
China, Hong Kong is at the particularly with the help of a growing number of high-
center of East Asia. Since its return to the Mainland in net worth individuals settling in Hong Kong. In 2017, the
1997, the special administrative region has followed the total asset under management (AUM) of funds registered
“One Country, Two Systems” policy under the Basic Law, for sales in Hong Kong expanded by 29.4% year-on-year
its mini-constitution. Hong Kong is considered one of to US$1.66 trillion, with comparable growth among key
the world’s freest economy, and under its laissez faire categories such as equity, bond, and mixed-asset funds.
system its financial sector has developed to be one of the
centers in the region. In addition, Hong Kong continues Hong Kong follows a free trade policy and hence
to play a significant role as a portal for the Mainland’s maintains basically no barriers to trade: there are no
merchandize and capital flow. customs tariffs on goods imported into or exported from
Hong Kong. Import and export licensing are kept to a
According to the United Nations Conference on minimum. Most products do not need licenses to enter
Trade and Development (UNCTAD) World Investment or leave Hong Kong and where licenses or notifications
Report 2018, global FDI inflows to Hong Kong amounted are required, they are only intended to fulfill obligations
to US$104 billion in 2017, ranked 3rd globally, and under various international agreements, or to maintain
behind only the Mainland (US$136 billion) in Asia. In public health, safety or security. Therefore, while much
terms of outflows, Hong Kong ranked 3rd in Asia with of Hong Kong’s indigenous manufacturing capacity
US$83 billion, after Japan (US$160 billion) and the has moved to the Mainland since the 1980s, it remains
Mainland (US$125 billion). Most of these investment a trade hub with a significant share of merchandizing,
flow, remarkably, is due to its position as a portal to transshipment, and trade facilitation in the region.
investment flows into and out of the Mainland. Thanks
partly to this proxy position, Hong Kong was the world’s Recent Policies and Reforms
2nd largest investor and host in FDI stock in 2017, after
the United States. First introduced in 2003, the Mainland and Hong
Kong Closer Economic Partnership Arrangement (CEPA)
Hong Kong also benefits from being a financial center. allows qualified Hong Kong products, companies and
According to the Bank for International Settlements, residents to enjoy preferential treatment accessing the
Hong Kong is the 2nd largest foreign exchange market Mainland market.
in Asia and the 4th largest in the world in 2016, with the
net daily average turnover of forex transactions reaching Hong Kong and the Mainland signed two new
US$437 billion. This is in part due to Hong Kong’s agreements on June 28, 2017, namely the Investment
position as a hub for offshore RMB. According to SWIFT, Agreement and the Economic Technical Cooperation
Hong Kong is the largest RMB clearing center in 2017, Agreement (Ecotech Agreement) to further facilitate
sharing about 76% of the world’s RMB clearing activities. trade and investment. This follows the signing of ten
supplements and two agreements on trade in services
Meanwhile, Hong Kong’s stock market was ranked over the years. With the two new agreements, CEPA
the 3rd largest in Asia and the 6th largest in the world becomes a comprehensive free trade agreement
in terms of market capitalization as of end-2017. There (FTA) covering investment as well as economic and
were 2,118 companies listed on HKEx and the total technical cooperation on top of trade in goods and
114
