Key Information

inSight
Speeches
Speeches by Speaker
Norman T.L. Chan
Peter Pang
Eddie Yue
Arthur Yuen
Raymond Li
Edmond Lau
Esmond Lee
Meena Datwani
Vincent W.S. Lee
James Lau
Joseph Yam
Y K Choi
William Ryback
David Carse
Tony Latter
Andrew Sheng
Hans Genberg
Simon Topping
Michael Taylor
The Honourable Donald Tsang
Chen Yuan
Dai Xianglong
Don Brash
Jaime Caruana
Andrew Crockett
Mario Draghi
David Eldon
Stanley Fischer
Timothy F. Geithner
Stephen Grenville
Kenneth G. Lay
William McDonough
Ernest Patrikis
Glenn Stevens
Jean-Claude Trichet
Tarisa Watanagase
Zeti Akhtar Aziz
Press Releases
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
Press Releases by Category
Bogus Voice Message Phone Calls
Banking in Hong Kong
Fraudulent Websites, E-mails and Telephone System, and other fraud cases
Granting of Banking Licences
Exchange Fund
Table of Multiples of Notes and Payments for Allotted Amount under non-competitive tender
Table of Multiples of Notes and Payments of Application Amount under non-competitive tender
Tender of Exchange Fund Bills and Notes
Tender Results of Exchange Fund Bills and Notes
Tentative Issuance Schedule for Exchange Fund Bills and Notes
Appointments and Departures
HKMA Pay Review
HKMA Publications
Speeches
The Hong Kong Mortgage Corporation
Hong Kong Note Printing Limited
Hong Kong Institute for Monetary Research
Exchange Fund Investment Limited
Others
Hong Kong Financial Infrastructure
International Relations
Investment Products Related to Lehman Brothers
Monetary Policy
Notes and Coins
Renminbi business
Credit Card Lending Survey
Monetary Statistics
Residential Mortgage Survey
Year 2000
Others
Guidelines and Circulars
Guidelines
Circulars
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
421.9001

Speeches

Opening Remarks at the Second High-Level Policy Dialogue under the APEC Initiative on Development of Securitisation and Credit Guarantee Markets

by Joseph Yam, Chief Executive, Hong Kong Monetary Authority

22 March 2004

It is a pleasure to welcome you all to this Second High-Level Policy Dialogue under the APEC Initiative on Development of Securitisation and Credit Guarantee Markets. We are honoured that Mr Gwang-Lim Kim and Mr Jamil Kassum will be opening this Dialogue, and the excellent list of participants promises a very constructive and lively discussion.

Hong Kong, China is pleased to co-chair, with Korea and Thailand, the APEC Initiative on Development of Securitisation and Credit Guarantee Markets. On behalf of all three co-chairs, I would like to extend our sincere thanks to the World Bank for its considerable contributions to this Initiative. These contributions range from active participation to sponsoring experts to provide technical advice to APEC member economies on how to develop their domestic securitisation and credit guarantee markets.

It is generally recognised that there is considerable room for improvement in the efficiency of financial intermediation in this region. The bulk of savings find their way back to the region largely in the form of foreign portfolio flows and short-term banking credits, which present risks to financial stability. Local corporations have been relying too much on bank credits and equity markets as the major sources of financing.

Among the various measures that have been put forward to address the structural impediments to the development of the bond market, securitisation, coupled with credit enhancement, provides the most effective and immediate solution. Securitisation enables borrowers to issue asset-backed securities that can enjoy a credit rating higher than a single borrower can obtain on its own. When combined with credit enhancement and guarantee arrangements, these securities can further attain a credit rating high enough to meet the requirements of investment managers. Securitisation will also help smaller corporations gain access to regional bond markets and reduce their reliance on short-term commercial bank finance.

Securitisation is gradually gaining momentum in Hong Kong. The Hong Kong Mortgage Corporation (HKMC) has been issuing mortgage-backed securities since 1999. More recently, synthetic securitisation and credit card receivables securitisation transactions began to appear. Not only is securitisation a tool for developing the bond market, it is also useful for financing infrastructure projects. The Hong Kong SAR Government intends to securitise the income receipts of five toll tunnels and the Tsing Ma Bridge to raise more than HK$6 billion in the coming months.

It is against this background that the idea for this APEC Initiative was conceived. The objectives of the Initiative are to promote the understanding and awareness of the importance of securitisation and credit guarantees to bond market development in the region, and to assist APEC member economies in identifying market impediments and taking concrete steps to remove them. We tackle the impediments in the domestic bond markets first, so that the regional bond market can be developed from liquid and deep domestic bond markets.

The Initiative comprises two core parts. The first part involves expert panel visits to the APEC economies interested in developing their domestic securitisation and credit guarantee markets. The first panel visits, to China and Mexico, were launched in 2003, and a second panel visit was made to Thailand earlier this month. Draft action plans have been prepared for the economies receiving expert advice. The second part of the Initiative involves the holding of policy dialogues to promote understanding and exchange views about securitisation and credit guarantee markets. The first policy dialogue under the Initiative was held in April 2003 in Seoul, Korea. We are delighted that Hong Kong is now the host for this second policy dialogue.

This APEC Initiative aims at developing the bond markets from the supply perspective. Two other initiatives in the region tackle the issue in a complementary way. An initiative by ASEAN+3 focuses on facilitating access for a wide variety of issuers to the regional bond markets and on creating an environment conducive to the development of bond markets. Working groups have been established to examine the creation of new securitised debt instruments, issuance of debt by international financial institutions, regional credit guarantees and enhancement facilities, as well as the establishment of local and regional credit rating and credit enhancement agencies.

Meanwhile, a group under EMEAP is developing the Asian Bond Fund (ABF). The first phase of ABF, or ABF1, has a size of about US$1 billion and was launched in June 2003. The Fund is now fully invested in US dollar denominated bonds issued by sovereign and quasi-sovereign issuers in EMEAP economies. ABF1 is an important step forward in promoting the efficiency of financial intermediation in the region. It helps to channel a small portion of the very sizeable official reserves held by the Asian economies back into the region. After the launch of ABF1, the EMEAP Group is now studying the extension of the ABF concept to local currency-denominated Asian bond funds, or ABF2.

ABF2 will have a positive impact on the demand and supply of local currency bonds in the region, as well as improving the market infrastructure. On the supply side, ABF2 will provide a new asset class to international investors who wish to have a well-diversified exposure to Asia's bond market. On the demand side, the investment of EMEAP Group in ABF2 will help foster an increased interest in Asian currency bonds amongst domestic and regional investors. Individual EMEAP economies can also leverage on the interest and momentum generated from the collective investment of the EMEAP central banks to further develop their domestic bond markets by improving their market infrastructure and removing market impediments. This should further contribute to the broadening and deepening of local currency bond markets in the region.

I think you will agree with me that the heterogeneous nature of the bond markets in this region presents considerable difficulties to developmental efforts. However, I am very pleased to note the many initiatives now in place, and governments have moved from "words" into "action". Academics and market practitioners have also been supporting the public sector initiatives by providing valuable and practical advice on the action plans to remove market impediments. The timing for development has never been better. Let us continue to work closely together, through bond market development, to enhance the diversity, and therefore the stability and efficiency, of financial intermediation in the region.

Thank you.

Last revision date: 1 August 2011
ABOUT THE HKMA
The HKMA
Tender Invitations
Careers@HKMA
Legislative Council Issues
Links
The HKMA Information Centre
KEY FUNCTIONS
Monetary Stability
Banking Stability
International Financial Centre
Exchange Fund
PUBLICATIONS & RESEARCH
Annual Report
Half-Yearly Monetary & Financial Stability Report
Quarterly Bulletin
HKMA Background Briefs
Reference Materials
Research
MARKET DATA & STATISTICS
CMU Bond Price Bulletin
Economic & Financial Data for Hong Kong
Monthly Statistical Bulletin
Monetary Statistics
KEY INFORMATION
Press Releases
Speeches
Guidelines & Circulars
Forthcoming Events
inSight
OTHER INFORMATION
Account Opening
Consumer Corner
Consumer Education Programme
Complaints about Banks
Complaints about SVF Licensees
Internet Banking
Fraudulent Bank Websites, Phishing E-mails and Similar Scams
Be Careful of Bogus Phone Calls and SMS Messages
Authenticate the Callers and Bank Hotline Numbers
Register of AIs & LROs
Register of Securities Staff of AIs
Register of SVF Licensees
Investment Products Related to Lehman Brothers
Photo Gallery