Globally, the Islamic financial sector is worth an estimated US$700 billion to US$1 trillion, and is expected to grow by 15% annually.

"At present, assets worth more than US$300 billion are being held by some 300 Islamic financial institutions in 75 countries. A further US$400 billion is managed by the Islamic business units of international banks," Tsang noted.

The focus will be on the bond market. The Hong Kong Monetary Authority, in conjunction with the financial sector, has set up a dedicated team to study related issues such as taxation and legal and regulatory frameworks, and to make recommendations for the early introduction of Islamic debt offerings in Hong Kong.

"The HKMA is going to hold a seminar early next year and I will do a lot more promotion work as well. We are looking at our regulations, we are looking at our market infrastructure to ensure we produce the right environment for the Islamic investors to come and do trade. The bond market is our major initiative at the moment. I think this is something that would be very useful and attractive to Islamic investors," Tsang told the bankers.

Tsang also observed that the emerging Chinese financial centres of Shanghai, Shenzhen, Tianjin are complementing one another and helping growth in Hong Kong, but he added that only one of these cities can emerge as the region's international finance hub.

"All of us are in a complementary and reinforcement role, helping our country grow into an economic superpower in the coming decade," he commented.

"For a country with an enormous economy like China, definitely we need more than one centre. But as far as an international financial centre is concerned, this is a different matter. I believe this role of ours, separated into three major time zones of eight hours each, we cannot sustain too many international financial centres," he added.

"For instance, serving the Americas you have New York, serving Europe you have London. In (the) Asian time zone I feel that we already have a head start. We have the best infrastructure, we've got the best people - people in this room - helping it grow and sustain its strength. We feel no competition, we welcome competition and I do believe Hong Kong will continue to be the premier international financial centre in our timezone," Tsang concluded.