As international financial activity increasingly focuses on the Mainland and the Asian time zone, Hong Kong's location and excellent infrastructure make it an attractive centre for that activity, and perhaps for financial markets themselves.

This is the message from Monetary Authority Chief Executive Joseph Yam in his latest Viewpoint article published today on the authority's website.

He said Hong Kong can benefit from the Mainland's emergence as one of the largest global players in some financial products, perhaps to the extent of being in a position to influence, or even dictate, a migration of global activities to the Asian time zone.

Proactive policy

"With the Mainland rising rapidly in significance in financial markets, the underlying conditions for a migration of financial market activities, if not the market place itself, to this time zone are becoming more favourable," he said.

"We obviously would like to see such migrations to Hong Kong, but a prerequisite is for the Mainland to adopt a proactive policy of supporting Hong Kong as an international financial centre by organising its international financial activities here."

Hong Kong does not have a domestic economy big enough to start or support a critical mass that justifies the natural existence or the deliberate establishment of markets in particular financial products.

Noting supply and demand will need to come from outside Hong Kong, Mr Yam said there are successful examples of other jurisdictions running international financial markets even though there is no significant demand or supply locally.

He said the quartet of market development issues - supply, demand, the price discovery mechanism and market infrastructure - must be considered systematically and comprehensively if Hong Kong is to stand a chance of success.