Hong Kong and the Future of Financial Services

Hong Kong – Asia’s world hub, and third global financial center, has faced a number of obstacles over the past three years. Notably, the 2019 protests which drew international attention closely followed by the global pandemic. Nevertheless, Hong Kong continues to thrive as the gateway between Mainland China and the rest of the world due to its financial integration, extensive global networks, free flow of capital, full range of financial products and a pool of financial talent. Hong Kong’s economy is indicative of this, which, according to Hong Kong’s Financial Secretary, Paul Chan, was expected to grow by 6.4% in 2021 and can continue in a growth trajectory in 2022[1]. This bodes well for the resilience of the financial services industry, one of the core pillars of Hong Kong’s success and a sector that represents nearly 7% of the working population in the city. It has also contributed a proportion of the 19% of Hong Kong’s Gross Domestic Product[2].

In February 2021, the Hong Kong Monetary Authority commented, “we are mindful that we need to keep enhancing our financial platforms to consolidate our strengths and maintain our leading position”[3]. The adoption of digital technology such as artificial intelligence (AI) and cloud-based goods has accelerated across the city, positioning “Hong Kong as the market of choice for fintech companies to scale up and expand regionally and globally”, commented Paul Chan at the Hong Kong FinTech Week (HKFTW) in November 2021.

 

Hong Kong – Fostering a vibrant FinTech ecosytem

In early November 2021, HKFTW returned to the city state; one of the first large scale in-person events held in the region in two years. In a recent press release, Invest Hong Kong explained that the primary theme of 2021’s event was Humanising FinTech; exploring “how FinTech can unlock the power of financial services to drive positive impacts for society and business”[4]. The event served to send a clear message to the APAC financial ecosystem, “Hong Kong is a super connector and the most international city in China, playing a special role to connect the East and the West, and acting as the fusion reactor for fintech from the Greater Bay Area,” remarked AMTD Group’s Chairman, Calvin Choi during the conference[5].

Hong Kong has powered through the pandemic with remarkable resilience and agility. The Asia-Pacific trading community readily utilized remote trading solutions and invested heavily in IT and infrastructure, “Businesses in Asia-Pacific are now very much aware of the importance of resilience – both now and for the future – and require a solution that offers an element of futureproofing, enabling them to adapt and maintain their competitive edge for any unforeseen events or challenges that may come their way.” David Brown, Chief Commercial Officer, IPC Systems.

Even as the recent China crypto ban cast a temporary shadow over the city, calling into question Hong Kong’s place as a potential global crypto asset hub, it remains a major financial and business center and will continue as an interface for Chinese blockchain technology to find international uses and customers[6]. The fact remains that Hong Kong does not have barriers of entry to the market by foreign businesses with an open and freeflow of capital and information. At 2021’s Hong Kong FinTech Week, Tencent Holdings and Fusion Bank’s Mr. Jim Lai remarked that the Hong Kong Monetary Authority’s focus on real time and cross-boundary transactions presents an enormous opportunity for banks to bring in more investors from China while giving the northbound access to money market funds.

Hong Kong is beginning to emerge from the uncertainty presented over the past three years, although somewhat altered, the foundation and longtime commitment to the industry remains clear in the region’s future.

 

IPC – Connecting global market participants to Asia’s key liquidity venues 

In recognition of Hong Kong’s continued dominance in the region, in September 2020, IPC, leading global provider of secure, compliant communications and networking solutions for the financial markets community, introduced Connexus Infrastructure Services (CIS), its industry-leading Infrastructure as a Service (IaaS) solution, at the Hong Kong Exchanges and Clearing Limited (HKEX) colocation facility.  Embedded in IPC’s flagship Connexus Cloud platform, trading engines and systems can be colocated across multiple exchange colocation and proximity sites, providing low-latency access to support electronic trading, including market data, trading engines, broker and market access.

CIS provides a turnkey infrastructure environment, providing a cost effective and time efficient solution to set up trading infrastructures across multiple venues via remote access. Solutions can be provided as dedicated bare-metal or virtual environments depending on locations and requirements.

CIS is available at multiple colocation and proximity sites in Asia Pacific, including HKEX, SGX, ALC, TY3 and others.

“Customers can benefit from faster, more flexible market access and cost-effective solutions that deliver the processing power and low-latency connectivity needed to effectively trade the markets.” – Ganesh Iyer, Chief Marketing and Strategy Officer, IPC.

 

 

[1] https://www.bloomberg.com/news/articles/2022-01-02/h-k-financial-chief-expects-2021-gdp-growth-to-reach-6-4

[2] https://www.hkma.gov.hk/eng/key-functions/international-financial-centre/hong-kong-as-an-international-financial-centre/

[3] https://www.hkma.gov.hk/eng/news-and-media/insight/2021/02/20210208/

[4] https://www.hkma.gov.hk/eng/news-and-media/insight/2021/02/20210208/

[5] https://finance.yahoo.com/news/silent-revolution-underway-hong-kongs-093000550.html?fr=sycsrp_catchall

[6] https://forkast.news/midnight-for-crypto-china-hong-kong-keeps-lights-on/