Financial Institutions in Hong Kong Econ 310 Section 4 Financial Institutions in Hong Kong Group Members: Cheng Wai Lun, Alan (033163) Tsang Sze Man, Judy (033182) Lee Lai Fong, Nesta (033185) Tang Wing Yi, Winnie (033198)

The prospect of Debt Market Topic: The prospect of Debt Market in Hong Kong

What is “Debt Market”? (I) Debt markets are often referred to generically as the bond market. (II) A bond is a security that is a claim on the earnings and assets of a corporation. (I) is true, (II) false. (I) is false, (II) true. Both are true. Both are false.

Before 1990’s: Hong Kong Government only emphasize the development of Bank and Equities Market

Until 1997: Asian Financial Crisis Hong Kong Government want Hong Kong to become a “Debt Market Center”

Does Hong Kong has potential to become such Asian debt market centre?

We would like to talk about this by: The opportunities of developing debt market in H.K The threat of development Ways to facilitate the debt market

Debt market loans to an entity  promises to repay the bondholders or note-holders the total amount borrowed Not owners of an entity, but its creditors Attention  debt prices fluctuate in response to the forces of supply and demand  influenced by other factors

Debt market (Source: Hong Kong Monetary Authority)

Debt market (Source: Hong Kong Monetary Authority)

Debt market (Source: Hong Kong Monetary Authority)

Debt market (Source: Hong Kong Monetary Authority)

Opportunity Political and Economic environment Encourage public corporations Executive forcibly on MPF scheme Mindset on the investment in Chinese

Threats Interest Rate (Source: Hong Kong Monetary Authority) Attraction

Threats (Source: Hong Kong Monetary Authority) Large fluctuation

Threats Investment culture >>short-term and high return investment Neglected the principle of diversification of risk

Which factor is not the threat of developing Debt Market? A) Investment Culture B) Executive forcibly on MPF Scheme C) Neglected the principle of diversification of risk D) Increase of the interest rate

Facilitate the Debt Market Hong Kong Government: provide a favourable external factors stable financial market sound legal system

Facilitate the Debt Market Asian governments  have a high saving rate of about 30 percent

Facilitate the Debt Market Mutual Debt Market  additional and stable investment channel for investors

Need to Focus on: Education Private sector or corporate  people recognize with debt market Private sector or corporate willing to issue bonds in order to satisfy the demand in market beneficial to raise more money for the better development to corporate.

Which is/are the favorable external factor(s)? A) Stable financial market B) Sound legal system C) Both of them D) None of the above

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