Finance hub: Secretary for Financial Services & the Treasury Frederick Ma believes Hong Kong stock market's value ranking in the world will rise in the next two to three years.

Hong Kong's stock market, with a total value of over $7 trillion, ranks second in Asia following Japan and ninth in the world, Secretary for Financial Services & the Treasury Frederick Ma says.

He believes the rank will climb in the next two to three years as more capital-raising activities are planned.

Speaking on RTHK's "Dialogue with Secretaries" programme today, Mr Ma said with the total value of Hong Kong's stock market equals more than five times the local Gross Domestic Product - higher than that of New York and Tokyo - reflecting Hong Kong's uniqueness as a capital-raising platform for Mainland enterprises.

He pointed out Hong Kong must strengthen its position as an international financial hub, and maintain its international-standard regulatory mechanism, to facilitate the inflow of overseas capital and continue to serve as a capital-raising platform for Mainland firms.

Mr Ma said there are more than 140 Mainland firms listed in Hong Kong, which have raised close to $1 trillion in capital.

Apart from helping companies raise cash, Hong Kong also helps Mainland firms to improve corporate governance.

Honing our competitive edge

Facing competition from Mainland financial centres like Shanghai and Shenzhen, Mr Ma said Hong Kong has a good legal system and stringent standard of regulation, and investors' confidence in Hong Kong has already been built up.

To maintain its edge, Hong Kong must improve, in particular in areas like offering tax concessions to attract overseas investment, diversification of products and maintaining a pool of international financial experts.

He said as a financial hub, Hong Kong also has a booming bonds market, insurance and banking sectors and a strong securities market, adding its fund-management sector would benefit if there is a free flow of Renminbi in future.

On the proposed setting up of the Financial Reporting Council, Mr Ma believes it will raise the accountability and transparency of the monitoring mechanism over the accountancy sector, raising the market quality and protecting investors' interests.

He said the proposed initial operational fund of $10 million for the council is sufficient, because the Companies Registry will cover its office costs. Also, the registry, together with Securities & Futures Commission, Hong Kong Exchanges & Clearing and Hong Kong Institute of Certified Public Accountants, will contribute another $10 million for the council.

Fuzhou visit 'a success'

Mr Ma said  last week's visit to Fuzhou was a success. About 10 venture-capital investment-funds managers had joined the delegation, offering services to nurture budding Mainland enterprises so they can be listed in Hong Kong in future.

This, together with the fund-management services in Hong Kong, can be described as "one continuous line" of services, he said.

Mr Ma said developments in Fuzhou, including large-scale infrastructural projects like the railway to link with Shenzhen and its booming electronics industry, have provided numerous business opportunities for investors from both cities.

Since the visit, a bank and an accountancy firm have indicated they are considering setting up branches in Fuzhou.

Mr Ma added the Financial Services & the Treasury Bureau will host a financial forum next March. With representatives from the Pan-Pearl River Delta region taking part, it will boost cooperation opportunities in financial services.