Hong Kong, Shanghai Enhance Financial Co-operation

by Mary Swire, Tax-News.com, Hong Kong

09 January 2012

Following the signing in 2010 of the Memorandum of Understanding Concerning Advancing Hong Kong-Shanghai Financial Co-operation (MOU), officials held their second working meeting on January 6, 2012, in Shanghai, to enhance financial co-operation between the two places.

Led by Hong Kong’s Permanent Secretary for Financial Services and the Treasury, Au King-chi, and the Vice-Director of the Shanghai Municipal Government Financial Services Office, Fan Yongjin, representatives of the two cities discussed financial issues of mutual concern, including ways to foster links in financial services and products, enhance training and exchange of financial talents, as well as strengthen co-operation between financial institutions in Hong Kong and Shanghai.

Au briefly introduced to the Shanghai representatives the development focus of the financial services industry in Hong Kong, including promoting international capital formation functions, fostering offshore renminbi (RMB) business, serving as the preferred platform for mainland China's financial enterprises and institutions to go overseas, and strengthening the asset management business.

On financial services and products, the two sides considered the joint promotion of investment in Shanghai's equity market through the RMB Qualified Foreign Institutional Investor scheme. They also discussed the listing of ETFs (exchange-traded funds) tracking Hong Kong stocks on the Shanghai Stock Exchange and explored the possibility of introducing more ETF products.

The two sides also had discussions on the issue of H shares (the shares of companies incorporated in mainland China that are traded on the Hong Kong Stock Exchange) and RMB bonds by Shanghai financial institutions and enterprises in Hong Kong; information, personnel and comprehensive business co-operation between the Shanghai Futures Exchange and Hong Kong Exchanges and Clearing Limited; as well as collaboration in the development of marine insurance.

There had also been held in Shanghai, on the previous day, the Second Plenary Session of the Hong Kong-Shanghai Economic & Trade Co-operation Conference, co-chaired by Hong Kong’s Chief Executive Donald Tsang and the city’s Mayor Han Zheng.

At the meeting, the Hong Kong and Shanghai signed various co-operation agreements covering, for example, business and investment; finance, air transport, maritime and logistics; tourism, exhibition and conferences; and innovative technology.

It was agreed that Hong Kong and Shanghai should strengthen ties, by pushing ahead for measures under the Closer Economic Partnership Arrangement and helping Shanghai enterprises enter the overseas market via Hong Kong’s international platform. Hong Kong pledged to support the establishment of the joint venture company of the stock Exchanges of Hong Kong, Shanghai and Shenzhen.

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