Exclusive | Beijing’s brokerage probe to stop ‘leakage’, Paul Chan tells Davos Dalian event
Beijing’s recent investigation into three brokerages – Futu Securities, Tiger Brokers and Long Bridge – was partly driven by concerns over foreign exchange “leakage” and the need to protect mainland China’s vast base of retail investors, Hong Kong’s finance chief has said. At a closed-door C-suite r
By Vincent Chow
Beijing’s recent investigation into three brokerages – Futu Securities, Tiger Brokers and Long Bridge – was partly driven by concerns over foreign exchange “leakage” and the need to protect mainland China’s vast base of retail investors, Hong Kong’s finance chief has said.
At a closed-door C-suite round table organised by the South China Morning Post on Wednesday, Financial Secretary Paul Chan Mo-po said Beijing was overall “supportive” of Hong Kong’s role as an international financial centre.
But he added that the central government still needed to be cautious about potentially destabilising capital outflows and investor losses.
“[Beijing] wants Hong Kong to succeed, but at the same time, they have to do this carefully,” Chan said.
The round table discussion was held on the sidelines of the World Economic Forum’s Annual Meeting of the New Champions, also known as “Summer Davos”, in Dalian, Liaoning province.
“Because on the mainland, investors are mainly retail investors, while in Hong Kong, it’s mainly institutional investors,” he said.
“Imagine, when you have at least 200 million and up to 400 million retail investors [on the mainland], if something goes wrong … [and] people [take] to the streets, you will be in trouble.”
Beijing opened an investigation into the three brokerages last month for allowing mainland investors to trade overseas stocks without the required licences, prompting concerns that Hong Kong’s status as the world’s largest offshore yuan trading hub could be affected.
But Chan dismissed such concerns in his remarks to the Asian and international C-suite leaders, emphasising that both Hong Kong and central authorities were working on expanding existing legal channels for mainland investors to tap the city’s financial services, including the Cross-Boundary Wealth Management Connect scheme.
“Both sides are working to expand eligibility, quotas and the range of products under the … scheme, although enhancements will take time to be finalised,” he said, hinting that the range of stocks available to mainland investors under the parallel Stock Connect scheme would also be expanded in the future.
“What we are doing at the moment is building our connect schemes on multiple fronts,” he said. “[We want to] build a very modern infrastructure so that these investors, no matter if they are bond or equity investors, can put their investments into what we call an Asian version of an international central securities depository.”