Dubai: Hong Kong, an externally oriented economy with a robust financial services sector is keen to work closely with the businesses and the financial services sector in the UAE in mutual interest, John C Tsang, Financial Secretary of Hong Kong told Gulf News in a recent interview.
“People from our part of the world know very little about what is happening in the Middle East. We believe that it is time we actively engaged this region as part of expanding our global relations. On the economic front too, we think it is very important to establish close ties with this region which is reporting robust economic growth despite continuing low global growth and recession in some parts of the world such as Europe and Japan,” said Tsang.
An export oriented economy, Hong Kong is keen to utilise the hub status of the UAE to reach out to wider Middle East region and Africa that have large markets with growing population. He also sees great opportunity for businesses from the Middle East utilising the financial services infrastructure of Hong Kong to expand their business to main land China and the Far East.
“It makes a lot of sense for companies from this region to use Hong Kong as a platform to do business with China and Far East,” said Tsang.
While Hong Kong’s peg to the US dollar make it less susceptible to currency volatilities, a large number of small and medium enterprises from around the world use the territory to do business in the Far East and China.
While the UAE is emerging fast as a financial services hub for the Middle East and Africa, Hong Kong’s established hub status in the Far East provides a lot of synergies for cooperation. In Hong Kong, financial services business contribute about 16 per cent of our GDP.
Hong Kong recently issued a $1 billion (Dh3.67 billion) sovereign sukuk. It was oversubscribed 4.7 times mopping up about $4.7 billion. About 36 per cent of the issue was subscribed by investors from the Middle East.
Raising funds
The issue, Tsang said, was aimed at demonstrating the bond market capability of Hong Kong, rather than the need for raising funds. “The rates we got for the sovereign bond was 2.005 which is only 23 basis points higher than the five-year treasury. It can’t get much cheaper than that for us. In fact we don’t need to raise money. I have been the financial secretary for the past 7 years and we were in surplus every year,” said Tsang.
Tsang said the financial services sector is an area where he sees a lot of potential to cooperate.
“Currently we work very closely with the Dubai International Financial Centre (DIFC) and we look forward to working closely with the Global Markets Abu Dhabi,” said Tsang.
The Hong Kong official said as the renminbi (RMB) denominated bond market and trade settlements are becoming a popular, the UAE has a huge scope in tapping Hong Kong’s capabilities in both these areas.
“We do have a lot of companies doing business with China come to Hong Kong, raise money at attractive rates. Hong Kong is the biggest offshore centre for RMB transactions. It has more than $1 trillion in deposit base, so the liquidity is plentiful.
Tsang expects to see bond issues denominated in RMB to pick up pace in the future with more companies from the UAE and the Middle East raising funds through this route.
