The 2002 CLSA (Credit Lyonnais Securities Asia) Investors' Forum opened in Hong Kong yesterday, and heard CLSA chief economist Jim Walker say that he expected Hong Kong to abandon its dollar peg in favour of a unified currency with mainland China in the foreseeable future.
"The prospect of two currencies in the same country with two different interest rates is just ridiculous. I think there will be a unification of currencies at some point; it would make a lot more sense because Hong Kong's economy is driven by China's economy, not the United States," Mr Walker said.
Most analysts think that it will be as much as 10 years or more before Beijing is ready to make the yuan convertible, but Mr Walker believes it may happen as early as 2007.
Christopher Wood, CLSA managing director of global emerging markets equity strategy, said the firm was bullish on Asia in general, and thought that Hong Kong was 'reinventing itself in the small and medium-sized enterprise sector'. However, this would not have much of an impact on the Hang Seng; and he also didn't set much store by China's proposed qualified domestic institutional investor scheme as a bull factor for Hong Kong, because "Beijing won't want to let all their capital out".
The CLSA Investors' Forum was established in 1994 by global institutional investors and company heads with the aim of sharing information on their investment in emerging markets. Lee Ki-ho, Korean special adviser to the President on economy, welfare and labor, will deliver a keynote speech today on Korea's economic rebound and reform policies, and will stress that the government will privatize state-run corporations as scheduled, regardless of the coming local and presidential elections.
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