Global financial crisis could strengthen Hong Kong, leader claims
Hong Kong's chief executive believes the city could emerge as a more important financial centre because of the global economic meltdown, a news report said Monday.
Chief Executive Donald Tsang argues the "collapse" of London and New York could benefit the former British colony, according to the Hong Kong Standard, reported dpa.
In his annual policy address speech this week Tsang plans to say that Hong Kong "remains strong and may even grow as a result of the financial tsunami," the newspaper said.
It quoted a government source saying that Tsang would tell Hong Kong citizens to brace for tough times ahead but not to assume that the downturn will bring only bad news for the city of 6.9 million.
"People around the world still need to invest," the source was quoted as saying. "Hong Kong may have a chance to emerge as a leading financial market with the collapse of New York and London."
The financial industry in Hong Kong only represents about 15 per cent of the gross domestic product and Tsang's speech will say that the industry has room to develop further, according to the Standard.
He is expected to emphasize the importance of maintaining the free flow of capital and also confirm that the Hong Kong dollar peg to the greenback will remain in place, particularly because of the financial turmoil, the newspaper added.
Hong Kong stocks have seen more than one-fourth of their value wiped out in the past three weeks as a result of the global economic turmoil, despite two interest rate cuts aimed at boosting liquidity.
However, officials say the wealthy city's financial fundamentals are sound and the level of exposure to the worst-hit US institutions is limited.