BEIJING, Nov. 14 (Xinhua) -- In the Guangdong-Hong Kong-Macao Greater Bay Area, Shenzhen has emerged as a leader in innovation capacity and continues to create new business formats and drive traditional industries upgrading. At the same time, Guangdong boasts a comprehensive industrial system and a solid manufacturing base, while Hong Kong possesses significant advantages in the financial services sector.
In this context, it is easy to integrate the advantages of “finance plus innovation” in the Greater Bay Area under the connectivity mechanism of the Chinese mainland and Hong Kong’s financial markets, thus providing broader financing platforms for enterprises to carry out innovation.
-- Innovation in local FinTech picks up pace
The FinTech sector is a typical example of combining the advantages of “finance plus innovation” in the Guangdong-Hong Kong-Macao Greater Bay Area. In the opinion of Hong Kong Financial Secretary Paul Chan, FinTech is set to boost the development of financial industry in the future.
There are currently more than 200 FinTech start-ups in Hong Kong, while the FinTech sector, including mobile payment, intelligent investment advisory, digital currency and block chain, is playing an increasingly important role in Shenzhen’s market.
As an important international financial hub, Hong Kong has a sound financial infrastructure and well-established regulatory and legal systems. Thus, the local environment can benefit the innovation-driven development of financial institutions and FinTech companies. Moreover, multiple types of players in Hong Kong’s financial market are both potential customers and partners of FinTech companies.
Meanwhile, with lots of FinTech talents and industries gathering, Shenzhen can integrate with Hong Kong’s financial services via novel technologies, such as cloud computing, big data, block chain, artificial intelligence and e-payment. In this way, the operational efficiency of financial institutions and industrial and commercial enterprises in the bay area can be enhanced, while assisting the sector in exploring new development models.
-- Financing platforms support innovation
The Greater Bay Area is also home to many other types of innovative enterprises, e.g. Huawei, Tencent, ZTE, BYD and DJI-Innovations. While they grow bigger and stronger, the interconnected financing platforms have extended significant support.
According to Paul Chan, the Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, Bond Connect and Mutual Fund Connect arrangement, among other programs, launched over the past few years are poised to promote the opening of the Chinese mainland’s capital market to the outside, while enabling Hong Kong and other international investors to access more channels for investment in the Chinese mainland’s products.
The growth of innovative enterprises in the Greater Bay Area proves that VC and PE firms in Hong Kong have diversified the choices of start-ups, while the possibility of launching IPOs in Hong Kong has brought rich investments from other countries.
Moreover, the induction of the Chinese mainland’s capital has mitigated the adverse impacts arising out of Hong Kong businesses’ knack for short-term arbitrage. It has also offered more funding sources and more promising market prospects for innovative enterprises with long-term growth trajectory.
KC Chan, former Secretary for Financial Services and Treasury of Hong Kong, said that the Chinese mainland and Hong Kong should continue to deepen connectivity and cooperation in the financial industry. He believes that this can further the innovation-driven development of an array of sectors in the Greater Bay Area.
Meanwhile, BOC International CEO Li Tong suggested that the Chinese mainland and Hong Kong could consider introducing some other innovative arrangements, such as new stock connect, fund connect and derivative connect, and raising the caps on transaction limits in a bid to improve overall investment and financing abilities.
-- Finance plus innovation to expand enterprises’ reach
The “finance plus innovation” advantage of the Greater Bay Area can help enterprises in launching their innovative achievements around the world while tapping business opportunities. It can also lift different types of innovative enterprises to the higher end of global value chain.
In this context, Zhang Yidong, chief global strategy analyst at Industrial Securities, said the Bay-based enterprises could maintain their foothold in Hong Kong and export goods and services to the rest of the world.
So far, Hong Kong has become the hub of global offshore RMB business. Along with the rollout of connectivity measures, the varieties and amounts of RMB-denominated investment products in the market have been increasing. In this context, innovation capital in the Greater Bay Area is expected to expand. At the same time, Hong Kong can conveniently serve offshore RMB settlement & financing and fund management demands in the Greater Bay Area.
With a rules system and abundant experience in interacting closely with international financial services, Hong Kong can act as the pillar of innovative enterprises that are willing to go global in the Greater Bay Area. KC Chan advised these enterprises to set up treasury centers for fund management and self-insured subsidiaries for higher risk management efficiency in Hong Kong. He further advised them to expand the business scale and market coverage, leveraging Hong Kong’s specialization in M&A deals.
Furthermore, Guangdong Development and Reform Commission director He Ningka said that efforts are afoot for cultivating the Guangdong-Hong Kong-Macao financial cooperation platform in a bid to expand bilateral opening-up and enhance connectivity in the three financial markets, besides building a financial hub that guides the Pan-Pearl River area, radiates over Southeast Asia and serves the Belt and Road Initiative.
(Edited by Yang Qi, kateqiyang@xinhua.org)
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