Financial Services
51. We have been continuously enhancing our financial market infrastructures and regulatory regime, with the aim of boosting the competitiveness of Hong Kong as an international financial centre. The financial market is highly volatile. To ensure financial security, under my steer, financial regulators have taken great efforts on shock-resistance and market surveillance for the operation of a stable and orderly financial market. We will continue to fulfil the dual roles of facilitator and regulator. While consolidating our strengths and developing the market, we will ensure that our regulatory framework can keep pace with the times, manage systemic risks effectively and provide protection for investors.
Securities Market
52. The securities market in Hong Kong enjoyed flourishing development in the past year. Since the launch of the reform in end-April 2018 to facilitate the listing of new-economy companies in Hong Kong, a total of 17 enterprises have listed in Hong Kong under the new regime and raised more than $200 billion, representing more than one-third of the funds raised through initial public offerings during the same period.
53. The rapid growth of the Exchange Traded Fund (ETF) market in recent years has brought new opportunities for the development of our securities market. In order to strengthen the competitiveness of Hong Kong as an ETF listing platform, I propose to waive the stamp duty on stock transfers paid by ETF market makers in the course of creating and redeeming ETF units listed in Hong Kong. This initiative will further reduce the transaction cost of ETFs listed and spur the development of the ETF market in Hong Kong.
Green Finance
54. Last year, we saw the successful offering of our inaugural green bond of US$1 billion under the Government Green Bond Programme. The issuance was well received by investors worldwide and set an important new benchmark for potential issuers in Hong Kong and the region. We plan to issue green bonds totalling $66 billion within the next five years, having regard to the market situation. This will further consolidate and develop Hong Kong's position as a premier green hub in the region.
Retail Bond Market
55. In view of three rounds of interest rate cuts in the US last year and the low interest rates prevailing in Europe and Japan, I expect the global low interest rate environment to persist for a long time. Given that past issuances of inflation-linked retail bonds (iBond) were generally well-received, we plan to launch a further issuance of iBond this year to promote the further development of the retail bond market.
56. We will also continue to issue Silver Bonds to provide Hong Kong residents aged 65 or above with more appropriate investment products, and to encourage the financial sector to continue to develop the silver market.
57. Depending on the market situation, the issuance size of the two types of bonds above will not be less than $13 billion. The Hong Kong Monetary Authority will announce the details in due course.
Public Annuities
58. On retirement financial planning, the Government launched the Hong Kong Mortgage Corporation Limited (HKMC) Annuity Plan in 2018 to assist the elderly in turning their assets into a lifelong stable cashflow. Over the past two years, the public and the retirees have raised their awareness of life annuity. This gives new impetus to the annuity market.
59. I will lower the minimum entry age of the HKMC Annuity Plan from 65 to 60 so as to facilitate early participation by those in need. The HKMC Annuity Limited will announce the details as soon as possible.
Fixed-rate Mortgage Loans
60. To provide potential homebuyers with more loan options and reduce the risks of interest rate volatility, HKMC will launch a pilot scheme to offer through banks fixed-rate mortgage loans, with interest rates of 2.75, 2.85 and 2.95 per cent per annum for periods of 10, 15 and 20 years respectively, capped at a ceiling of $10 million per loan transaction. The total loan amount under the scheme is $1 billion, subject to review based on market response.
Asset and Wealth Management
61. Hong Kong is an international asset and wealth management centre. The development of the Greater Bay Area presents enormous opportunities for the sector. To attract more funds to Hong Kong, we have been making full efforts to introduce new fund structures, including the preparation of new legislation on the establishment of a limited partnership regime that meets the operational needs of funds, so as to encourage the setting up of private equity funds in Hong Kong.
62. Promoting the development of private equity funds in Hong Kong will not only draw in capital, talent and expertise for a large number of business entities, technology companies and start-ups, but also drive demand for related professional services such as management, accounting and law while creating business opportunities in the service industry, including conference and exhibition, hotel, and tourism. With a view to attracting more private equity funds to domicile and operate in Hong Kong, we plan to provide tax concession for carried interest issued by private equity funds operating in Hong Kong subject to the fulfilment of certain conditions. We will consult the industry on the proposal, and the relevant arrangement will be applicable starting from 2020-21 upon completion of the legislative exercise.
Comprehensive Regulation
63. The Financial Action Task Force (FATF), an international regulatory body, completed a comprehensive evaluation of Hong Kong's anti-money laundering and counter-terrorist financing (AML/CTF) regime in mid-2019. Hong Kong is the first jurisdiction in the Asia-Pacific region having successfully passed the FATF assessment. The Government will further enhance Hong Kong's AML/CTF regime having regard to the recommendations of the evaluation report, and consider incorporating virtual asset service providers and dealers in precious metals, stones and jewellery into the AML/CTF regulatory framework. We plan to consult the public on detailed proposals this year.
64. Furthermore, we will continue to implement the latest international standards on banking regulation as promulgated by the Basel Committee on Banking Supervision, with a view to safeguarding the financial stability of Hong Kong.
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