• Hong Kong is a key international financial centre in the Asian time zone, hailed by TIME magazine as one of the three financially connected NYLONKONG cities (alongside New York and London) to drive the global economy, and to ease the entry of China into the modern world.
  
  
• Ranking third in three successive surveys by the Global Financial Centre Index (GFCI), Hong Kong's financial sector, like that of either London or New York, is distinguished by its cluster of financial experts and professionals, outstanding business environment, market access, infrastructure and general competitiveness. The contribution of Hong Kong's financing and insurance sector as a share of GDP has grown from 10% in 1997 to 16% in 2006.
  
  
• The significance of Hong Kong's stock market is reflected by the surge in market capitalisation, up from US$413 billion in 1997 to US$2,654 billion in 2007, with its global league rank gaining five places to 7 in the period. Hong Kong's stock bourse has since incorporated a considerable China dimension, illustrating the strong preference of mainland enterprises for having their shares listed and traded in the city.
  
  
• As an investment gateway, Hong Kong's premier stock market is also supplemented by a vibrant fund management sector, which provides for local and overseas investors a wide spectrum of investment choices in terms of geographical exposure and product variety.
  
  
• As a new force in Islamic finance, Hong Kong launched its first authorised retail Islamic fund in late 2007. The first Islamic bonds are expected to be launched by the end of 2008, amid attempts by the Hong Kong government to align its regulatory and taxation regime to attract Islamic finance to the city.

The significant role played by Hong Kong as one of the world's most important financial centres has been duly singled out by TIME magazine, which names Hong Kong as one of the NYLONKONG cities, and has been repeatedly affirmed by the high GFCI rankings for its capability in building up a strong pool of financial and professional expertise, especially those on the mainland market.

As China's most sophisticated financial centre, Hong Kong is the most liquid capital market for mainland enterprises with aspirations to "venture out" to the international arena. Its strong fund-raising capability, including post-IPO fund-raising, along with its close interface with international investors, has attracted some 440 mainland companies to list in Hong Kong (more than one-third of the number of Hong Kong-listed companies), which represent more than half of the local bourse's market capitalisation. Looking into the future, the Hong Kong stock exchange (HKEx) will continue to be the most preferred overseas listing exchange for mainland enterprises, especially for a growing number or private mainland enterprises.

In order that Hong Kong can further develop as an international platform for foreign listings like London and New York, the Hong Kong government and HKEx have jointly adopted a policy to facilitate overseas companies incorporated outside the four jurisdictions of Hong Kong, the Chinese mainland, Bermuda and Cayman Islands to list in Hong Kong, backed by more active overseas promotions. The recent HKEx announcement to implement a new framework for Hong Kong depository receipts (HDR) in July 2008 will entice more listings of overseas companies in Hong Kong, especially those with business ties with or interests in Hong Kong and the Chinese mainland, which may include companies in India, the Middle East, Russia and Vietnam, etc.

Hong Kong's strengths as an international capital market and fund management centre are underscored by the high participation of foreign and institutional investors. The HKEx Cash Market Transaction Survey (CMTS) conducted in 2007 showed that overseas investors contributed to 43% of Hong Kong's stock market turnover, the highest level since the CMTS survey began in 1991, while institutional investors contributed 65% of the turnover. Similarly, 62% of Hong Kong's combined fund management business of US$789 billion in 2006 was sourced from non-Hong Kong investors, as revealed by the SFC's latest Fund Management Activities Survey (FMAS). The size of fund business has grown by about 53% from 2003 to 2006.

With unparalleled China expertise, Hong Kong has been an effective conduit for investment in China-related investment. With no control over capital or information flows, Hong Kong, as China's only international financial centre, has played a supportive role in the mainland's market reforms, and will likely keep playing a useful role in the mainland's endeavour about orderly capital exit (through measures such as QDII). Considerable investment and business prospects are seen ahead. Besides, Hong Kong is also a gateway to investment opportunities elsewhere, with a growing number of funds offering investment in emerging markets like Russia, India, Vietnam and Latin America. Through product innovation, Hong Kong's fund industry is able to add and package new products to take advantage of the latest economic and investment trends. As an alternative investment hub, Hong Kong handles about 28% of the region's venture capital fund pool or US$40 billion through 185 Hong Kong-based funds.

To be a major international financial centre, Hong Kong must be able to churn out financial products and investment vehicles in light of the global trends and emergence of a new class of financial assets. Hong Kong, along with contenders like London and Jakarta, is keen to embrace Islamic finance, striving hard to catch up with industry pioneers like Malaysia and Gulf Council Cooperation countries. Drawing upon its solid experiences in closely aligning the two financial systems of Hong Kong and the Chinese mainland, Hong Kong is considering some regulatory and taxation initiatives to help attract Islamic finance to the city, and can be expected to play an important role in the process of reviewing and standardising the complex rules of Islamic investment and regulations governing Shariah compliancy in future. Following the successful launch of an authorised retail Islamic fund in late 2007, capital market watchers believe that the first spate of Islamic bonds will be issued by some Hong Kong corporations by the end of 2008.

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