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  • The HKMA Infrastructure Financing Facilitation Office (IFFO) today (11 September 2019) hosted a panel discussion titled “Sustainable Finance in Infrastructure” at the fourth Belt and Road Summit, looking into the business case of adopting sustainable finance in infrastructure projects and the latest industry trends and offerings.
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    11 Sep
    2019

    IFFO hosts panel discussion on Sustainable Finance in Infrastructure at the fourth Belt and Road Summit
     

    The HKMA Infrastructure Financing Facilitation Office (IFFO) today (11 September 2019) hosted a panel discussion titled “Sustainable Finance in Infrastructure” at the fourth Belt and Road Summit, looking into the business case of adopting sustainable finance in infrastructure projects and the latest industry trends and offerings.

     

    The panel discussion was moderated by Mr Darryl Chan, Executive Director (External) of the HKMA and Deputy Director of the IFFO and attended by the following industry leaders as speakers (in alphabetical order of last name):

     

    • Mr Michael Barrow, Director General, Private Sector Operations Department, Asian Development Bank;
    • Mr Herbert L W Hui, Finance Director, MTR Corporation Limited;
    • Mr Mukhtar Hussain, Group General Manager, Head of Belt & Road Initiative and Business Corridors, Asia Pacific, The Hongkong and Shanghai Banking Corporation Limited;
    • Mr Neil Johnson, Managing Director, Macquarie Infrastructure and Real Assets, Macquarie Asset Management; and
    • Mr Mushtaq Kapasi, Managing Director and Chief Representative, Asia Pacific, International Capital Market Association.

     

    There is a growing emphasis on integrating sustainability factors into infrastructure development, in view of its direct impact on the financial and operational performance of the assets. The panel speakers discussed the key trends in sustainable finance, the merits of incorporating Environmental, Social and Governance (ESG) factors into business decisions, and how those factors have transformed the investing and financing behaviours.

     

    HKMA Infrastructure Financing Facilitation Office

     

    About HKMA Infrastructure Financing Facilitation Office (IFFO)
    As part of the HKMA, IFFO’s mission is to facilitate infrastructure investments and their financing by working with a cluster of key stakeholders.

     

    The functions of IFFO are:

    • providing a platform for information exchange and experience sharing;
    • building capacity and knowledge on infrastructure investments and financing;
    • promoting market and product development; and
    • facilitating infrastructure investment and financing flows.

     

    By establishing IFFO, the HKMA can play a valuable role as a catalyst in the facilitation of infrastructure investments and their financings with its mandate to promote Hong Kong as an international financial centre.

     

    For more information about IFFO, please visit http://www.iffo.org.hk.

     

  • The Hong Kong Monetary Authority (HKMA) and the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) co-organised the second ‘Connecting Belt & Road, Capturing Opportunities Together’ High-level Roundtable on 9 – 10 July 2019 in Hong Kong to discuss how Central State-owned Enterprises (CSoEs) can leverage on Hong Kong’s advantages to facilitate their overseas investment and business expansion.
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    10 Jul
    2019

    HKMA and SASAC Co-organise 2nd ‘Connecting Belt & Road, Capturing Opportunities Together’ High-level Roundtable
     

    The Hong Kong Monetary Authority (HKMA) and the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) co-organised the second ‘Connecting Belt & Road, Capturing Opportunities Together’ High-level Roundtable on 9 – 10 July 2019 in Hong Kong to discuss how Central State-owned Enterprises (CSoEs) can leverage on Hong Kong’s advantages to facilitate their overseas investment and business expansion.

     

    The roundtable focused on how CSoEs could leverage on Hong Kong’s strategic role in Mainland China’s reform and opening up as well as its unique advantages to “go out” for investment and expanding business overseas. The participants also exchanged with leading international institutional investors their experiences and challenges in infrastructure projects investment in emerging markets, and explored possible collaborative approaches and the latest global trends. They also looked into how Hong Kong could serve as a platform to raise the “environmental, social and governance” (ESG) standards of infrastructure projects overseas. The event brought together some 30 senior executives from SASAC and six CSoEs, as well as high-level representatives from Hong Kong’s financial and professional service sectors.

     

    Mr Norman Chan, Chief Executive of the HKMA said, “With a mature capital market and world-class professional services, Hong Kong provides enterprises with well-diversified financing channels, and has always been the preferred platform for Mainland enterprises’ to ‘go out’. This is the second High-level Roundtable we co-organised with SASAC. We highly appreciate SASAC in supporting and encouraging CSoEs to make greater use of Hong Kong as a platform for expanding business overseas. We look forward to fostering closer collaboration between CSoEs and the Hong Kong business community to explore development opportunities together.”

     

    Ms Zhao Aiming, Vice Chairman of SASAC said, “In the new era of China’s reform and opening up, Hong Kong has unique advantages in facilitating the CSoEs to “go out”, evolve as world-class and globally competitive enterprises, and shape the new landscape of opening up with emphasis on the Belt & Road development. Leveraging its position as an international financial, shipping and trading centre, with its well-developed financial markets, sophisticated risk management services, and conducive tax policies, Hong Kong can play an irreplaceable role in fostering a favourable environment, and broaden new horizons for the CSoEs to achieve market-oriented reforms, high-level openness and high-quality development. We hope that the CSoEs and Hong Kong could further strengthen their strategic ties and explore opportunities in Belt & Road projects with demonstrative effects; promote greater cooperation to develop the Guangdong-Hong Kong-Macao Greater Bay Area; further deepen collaborations to support enterprises in becoming more competitive globally, and at the same time, consolidating and enhancing Hong Kong’s status as an international financial, trading and shipping centre. This enables CSoEs and Hong Kong to leverage each other’s potentials and strengths, working together collaboratively in serving the needs of the country, realising win-win opportunities, and making greater contribution by jointly promoting the sustainable development of the Belt & Road Initiative.”

     

    Hong Kong Monetary Authority

  • The Government of the Hong Kong Special Administrative Region of the People’s Republic of China (the “HKSAR Government”) today announced the successful offering of its inaugural green bond (the “Green Bond”) under the Government Green Bond Programme.
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    22 May
    2019

    HKSAR Government’s Inaugural Green Bond Offering
     

    The Government of the Hong Kong Special Administrative Region of the People’s Republic of China (the “HKSAR Government”) today announced the successful offering of its inaugural green bond (the “Green Bond”) under the Government Green Bond Programme.

     

    The Green Bond, with an issuance size of US$1 billion and a tenor of 5 years, is a landmark transaction which sets an important new benchmark for potential issuers in Hong Kong and the region.

     

    Following a global roadshow commencing on 10 May 2019, covering Hong Kong, London, Paris, Frankfurt, Amsterdam, Boston, New York and Singapore, the Rule 144A/Reg S USD Green Bond was priced on 21 May 2019 at 2.555% (32.5 basis points over 5-year US Treasuries). Despite the recent financial market volatility, the Green Bond saw strong demand from global investors, attracting orders exceeding US$4 billion, which was more than 4 times the issuance size, allowing the final pricing to be tightened by 17.5 basis points from the initial price guidance.

     

    The deal attracted interest from a diverse group of conventional and green investors. Orders were received from over 100 global institutional investors, and 50% of the Green Bond was distributed to Asia, 27% to Europe and 23% to the United States. By investor type, 29% was distributed to banks, 30% to fund managers, private banks and insurance companies, and 41% to sovereign wealth funds, central banks and supranationals.

     

    “We are pleased to see such strong demand for the HKSAR Government’s inaugural Green Bond. The favourable response from global investors indicates not only their recognition of Hong Kong’s credit strength, but also their support of Hong Kong’s determination and efforts in promoting sustainable development and combatting climate change,” the Financial Secretary of Hong Kong, Mr Paul Chan, said.

     

    Mr Chan added, “The Green Bond has also received strong support from banks and service providers in Hong Kong throughout the preparation of the transaction, which is yet another demonstration of Hong Kong’s strengths as a leading green finance hub in the region.”

     

    The Green Bond is expected to be settled on 28 May 2019 and listed on the Hong Kong Stock Exchange and the London Stock Exchange. The Green Bond has been assigned credit ratings of AA+ by S&P Global Ratings and AA+ by Fitch.

     

    The Hong Kong Monetary Authority acts as the HKSAR Government’s representative in the Green Bond offering under the Government Green Bond Programme. Proceeds raised under the Programme will be credited to the Capital Works Reserve Fund to finance or refinance public works projects that provide environmental benefits and support the sustainable development of Hong Kong.

     

    In connection with the Programme, the HKSAR Government has published its Green Bond Framework, which sets out how the green bond proceeds will be used to fund projects that will improve the environment and facilitate the transition to a low carbon economy. A Second Party Opinion has been obtained for the Green Bond Framework from Vigeo Eiris. The Green Bond has also received the ‘Green Finance Certificate’ (Pre-issuance) from the Hong Kong Quality Assurance Agency.

     

    Credit Agricole CIB and HSBC acted as Joint Global Coordinators, Joint Lead Managers, Joint Bookrunners, and Joint Green Structuring Banks for the Green Bond offering.

     

    Hong Kong Monetary Authority

     

  • Chinese version only
    匯思:綠色金融新紀元
    7 May
    2019

    匯思:綠色金融新紀元 (Chinese version only)
     

    Click here for more information

  • The Hong Kong Monetary Authority (HKMA) today unveiled three sets of measures to support and promote Hong Kong’s green finance development. In his opening remarks at the HKMA Green Finance Forum today, Mr Norman Chan, Chief Executive of the HKMA, said that the HKMA will collaborate with the industry and other stakeholders to combat climate change risks and develop green finance.
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    7 May
    2019

    HKMA introduces key measures on sustainable banking and green finance
     

    The Hong Kong Monetary Authority (HKMA) today unveiled three sets of measures to support and promote Hong Kong’s green finance development. In his opening remarks at the HKMA Green Finance Forum today, Mr Norman Chan, Chief Executive of the HKMA, said that the HKMA will collaborate with the industry and other stakeholders to combat climate change risks and develop green finance.

     

    “Climate change is one of the major risks threatening the well-being of mankind. It must be tackled on a global basis and across different sectors of the economy. How the banking and financial system operates will clearly have an impact on the way in which climate risk is managed or reduced. The HKMA, in support of the mission to reduce climate change risks and to achieve sustainable finance, will launch three sets of measures,” said Mr Chan.

     

    These measures include:

    1. Green and Sustainable Banking:

      i. Phase I - developing a common framework to assess the “Greenness Baseline” of individual banks. The HKMA will also collaborate with relevant international bodies to provide technical support to banks in Hong Kong to better understand the green principles and methodology in undertaking the baseline assessment;

       

      ii. Phase II – engaging the industry and other relevant stakeholders in a consultation on the supervisory expectation or requirement on Green and Sustainable Banking, with a view to setting tangible deliverables for promoting the green and sustainable developments of the Hong Kong banking industry;

       

      iii. Phase III – after setting the targets, implement, monitor and evaluate banks’ progress in this regard.

     

    2. Responsible Investment: as the manager of the Exchange Fund, the HKMA will adopt a principle that priority can be given to Green and ESG investments if the long term return is comparable to other investments on a risk-adjusted basis. Specifically, to support Responsible Investment, the HKMA:

      i. has already incorporated Environmental, Social and Governance (ESG) factors in HKMA’s credit risk analysis of bond investment;

       

      ii. has required external managers of the Hong Kong equity portfolios to comply with the Principles of Responsible Ownership promulgated by the Securities and Futures Commission in 2016;

       

      iii. has invested two tranches of US$1 billion each in the Managed Co-lending Portfolio Programme (MCPP) run by the International Finance Corporation (IFC), with a substantial part of the MCPP targeting sustainable investments across emerging market;

       

      iv. will further grow the Exchange Fund’s green bond portfolio, through direct investment or investment in green bond funds;

       

      v. will participate in ESG-themed public equities investments through external managers in passive or active mandates targeting ESG benchmark index;

       

      vi. will accord green accreditation as a predominant factor in investment in our real estate portfolio; and

       

      vii. will consider an appropriate framework for disclosing information on the Exchange Fund’s Green and ESG investing efforts without arousing market sensitivity in the process.

     

    3. Centre for Green Finance (CGF):Establish the CGF under the HKMA Infrastructure Financing Facilitation Office (IFFO). It will serve as a platform for technical support and experience sharing for the green development of the Hong Kong banking and finance industry. Meanwhile, the CGF, together with the IFC, will co-organise the next Climate Business Forum in Hong Kong in early 2020. The Forum is the IFC’s flagship event to discuss trends and business opportunities relating to climate change and sustainability.

     

    The HKMA Green Finance Forum brought together over 120 representatives from key stakeholders in green finance including banks, asset managers, multilateral development agencies, professional service providers and green associations. The Forum featured panel discussions on policies, practices and prospects of ESG investment; as well as principles and practices relating to green and sustainable banking.

     

    Hong Kong Monetary Authority

    7 May 2019

  • The HKMA Infrastructure Financing Facilitation Office (IFFO) and the International Finance Corporation (IFC), a member of the World Bank Group, co-organised a seminar today (6 May 2019). Entitled “ESG & Impact Investing: Creating Long-Term Value”, the seminar was supported by the Ministry of Finance of China. The event was attended by around 40 senior executives, comprising institutional investors, financiers, project developers and operators, insurers, and professional service providers.
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    6 May
    2019

    IFFO and IFC host seminar on ESG and impact investing in infrastructure
     

    The HKMA Infrastructure Financing Facilitation Office (IFFO) and the International Finance Corporation (IFC), a member of the World Bank Group, co-organised a seminar today (6 May 2019). Entitled “ESG & Impact Investing: Creating Long-Term Value”, the seminar was supported by the Ministry of Finance of China. The event was attended by around 40 senior executives, comprising institutional investors, financiers, project developers and operators, insurers, and professional service providers.

     

    On the environmental, social, and governance (ESG) aspect of the programme, IFC specialists used investment cases to elaborate on how ESG is embedded in IFC’s investment process, and the importance of ESG in creating long-term value. IFC also introduced its Disclosure & Transparency Toolkit, which provides best practice guidance on information disclosure for companies attracting private sector investment. Also on impact investing, the IFC introduced their “Operating Principles for Impact Management” (the Principles) – a market standard launched recently for impact investing in which investors seek to generate positive impact for society alongside financial returns in a disciplined and transparent way.

     

    Mr Eddie Yue, Deputy Chief Executive of the HKMA and Director of IFFO, said, “We are glad to co-host this seminar with IFC, a trendsetter in ESG standards and a pioneer in impact investing. We are also honoured to have the support of the Ministry of Finance for this event. The collaborations with IFC and Ministry of Finance signify Hong Kong’s role as a gateway between Mainland China and rest of the world to promote ESG and impact investing. IFFO will continue to work with market leaders to build industry capacity in ESG and impact management, with a view to further promoting sustainable infrastructure, particularly in emerging economies."

     

    Mr Vivek Pathak, Director for East Asia and Pacific, IFC, said, “Impact investing needs to offer investors a transparent basis on which they can focus investment to achieve positive measurable outcomes for society in addition to adequate financial returns. The Principles facilitate this process by creating clarity and consistency regarding what constitutes managing investments for impact to bolster confidence in the market.”

     

    HKMA Infrastructure Financing Facilitation Office

    About IFFO

    As part of the HKMA, IFFO’s mission is to facilitate infrastructure investments and their financing by working with a cluster of key stakeholders. The functions of IFFO are:

    • providing a platform for information exchange and experience sharing;

    • building capacity and knowledge on infrastructure investments and financing;

    • promoting market and product development; and

    • facilitating infrastructure investment and financing flows.

    By establishing IFFO, the HKMA can play a valuable role as a catalyst in the facilitation of infrastructure investments and their financings with its mandate to promote Hong Kong as an international financial centre.

    For more information about IFFO, please visit http://www.iffo.org.hk

     

    About International Finance Corporation (IFC)

    IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. IFC works with more than 2,000 businesses worldwide, using their capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In fiscal year 2018, IFC delivered more than $23 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit http://www.ifc.org

  • Chief Executive of the Hong Kong Monetary Authority (HKMA), Mr Norman Chan, and Chairman of China Export & Credit Insurance Corporation (Sinosure), Mr Song Shuguang, signed a Memorandum of Understanding (MoU) with respect to establishing a strategic framework of co-operation to facilitate the financing and investments of infrastructure projects via the Infrastructure Financing Facilitation Office (IFFO) platform.
    IFFO and Sinosure sign MoU on infrastructure financing facilitation
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    24 Apr
    2019

    IFFO and Sinosure sign MoU on infrastructure financing facilitation
     

    Chief Executive of the Hong Kong Monetary Authority (HKMA), Mr Norman Chan, and Chairman of China Export & Credit Insurance Corporation (Sinosure), Mr Song Shuguang, signed a Memorandum of Understanding (MoU) with respect to establishing a strategic framework of co-operation to facilitate the financing and investments of infrastructure projects via the Infrastructure Financing Facilitation Office (IFFO) platform.

     

    As the official Export Credit Agency of the Chinese Government, Sinosure has been an active player in the Hong Kong infrastructure financing market. With closer collaborations between Sinosure and IFFO under the MoU framework, Sinosure will continue to develop its full range of product offerings, including project financing insurance, overseas investment insurance, guarantee, and credit rating, with a view to facilitating infrastructure financing activities by Hong Kong-based financial institutions. Sinosure and IFFO will also work closely together in reaching out to more Mainland Chinese corporates and encourage them to make greater use of Hong Kong’s platform for their investments in overseas infrastructure projects.

     

    Mr Norman Chan said, “I believe through close collaboration between Sinosure and the HKMA’s IFFO platform, Sinosure will make better use of Hong Kong’s advantages, thereby attracting more commercial banks and Mainland Chinese corporates to use the Hong Kong platform for offshore infrastructure financing and investments, which will be conducive to the implementation of the Belt and Road Initiative (BRI).”

     

    Mr Song Shuguang said, “A stable and sustainable cooperation between our two sides is conducive to Chinese enterprises’ trading export, foreign direct investment, and overseas market development. The signing of MoU also benefits the exchange of information and interaction of business for us, making joint efforts to serve the BRI. Sinosure is willing to further strengthen the ties with HKMA through the IFFO platform.”

     

    HKMA Infrastructure Financing Facilitation Office
    China Export & Credit Insurance Corporation



    About IFFO

    As part of the HKMA, IFFO’s mission is to facilitate infrastructure investments and their financing by working with a cluster of key stakeholders. The functions of IFFO are:

    • providing a platform for information exchange and experience sharing;

    • building capacity and knowledge on infrastructure investments and financing;

    • promoting market and product development; and

    • facilitating infrastructure investment and financing flows.

    By establishing IFFO, the HKMA can play a valuable role as a catalyst in the facilitation of infrastructure investments and their financings with its mandate to promote Hong Kong as an international financial centre.

    For more information about IFFO, please visit http://www.iffo.org.hk.

     

    About Sinosure

    Sinosure is a state-funded and policy-oriented insurance company tasked with the mission of promoting China’s foreign trade and international economic cooperation. Sinosure is the official Export Credit Agency of the Chinese Government. Since its establishment in 2001, Sinosure has experienced exceptional year-on-year growth while facilitating the financing of numerous strategic projects around the world. As the only policy-oriented insurance company in China, Sinosure has set favourable conditions in its underwriting policy, compensation ratio and insurance tenor for BRI countries’ projects.

    The two primary products provided by Sinosure under project insurance are Medium & Long Term Export Buyer’s Credit Insurance and Medium & Long Term Export Supplier’s Credit Insurance. Additional products and services include Overseas Investment Insurance, Financial Lease Insurance, Bonds & Guarantees, and Credit Rating services by SinoRating, a fully-owned subsidiary under Sinosure.

    The global financial crisis since 2008 highlighted Sinosure’s role as an important growth stabilizer and risk mitigator. With enhanced lending security provided by Sinosure’s insurance products, sustainable funding resources for projects and sponsors again became available in the export credit market at competitive all-in costs. Sinosure has been identified by lending banks as a reliable and responsible partner throughout the volatility in the global economy.

    As China continues to further integrate with the global economic community, Sinosure will remain a key player on the front lines of this trend. Sinosure is committed to facilitating outbound Chinese enterprises in embracing opportunities for economic globalization while presenting systematic risk mitigating solutions to our clients and global partners.

    For more information about Sinosure, please visit http://www.sinosure.com.cn.

  • The HKMA Infrastructure Financing Facilitation Office (IFFO) and the Insurance Authority (IA) co-organised a seminar on 26 Mar on the strategic roles of insurance and guarantee in project risk management.
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    26 Mar
    2019

    IFFO and IA showcase the Strategic Roles of Insurance and Guarantee in Project Risk Management
     

    The HKMA Infrastructure Financing Facilitation Office (IFFO) and the Insurance Authority (IA) co-organised a seminar today (26 March 2019) on the strategic roles of insurance and guarantee in project risk management. The seminar attracted over 80 senior representatives comprising largely IFFO partners such as export credit agencies, financiers, investors, multilateral financial agencies and project owners, as well as members from IA’s Belt and Road Insurance Exchange Facilitation (BRIEF) specialised in risk management including insurers, reinsurers, captive insurers and insurance brokers.

     

    The one-day seminar covered infrastructure case studies featuring viewpoints of both insurers and the insured on political and commercial risk insurances. Seasoned speakers elaborated on their key strengths and advantageous propositions in political risk insurance and guarantee. Various risk management experts from the Hong Kong insurance industry illustrated how insurance brokers and insurers customised insurance solutions to address the corresponding risk management needs during the project planning, construction and operation phases.

     

    At the seminar, attendees were also illustrated with case studies of infrastructure projects in emerging economies that involved both public and private entities of different nationalities, with a view to bringing out the importance of risk management in facilitating project investment and financing in the region.

     

    “Investing and financing complex projects in emerging markets involve a multitude of specialty risks,” said Mr Raymond Tam, Executive Director of the Policy and Development Division of the IA. “Insurance industry can offer solutions to address these risks, not only by granting of loss payments but sharing of technical knowhow on how to mitigate or avoid these risks. Hong Kong is well-positioned as a global risk management centre and a regional insurance hub to provide support in this regard.”

     

    Mr Vincent Lee, Executive Director (External) of the HKMA and Deputy Director of IFFO, said, “Risk management is crucial to the success of infrastructure investments and financing. The seminar deepens the participants’ understanding on the products offered by public and private insurers, and knowledge on applying suitable risk mitigation measures to further enhance project bankability. This event further showcases Hong Kong’s unique role in facilitating infrastructure investments and financing through providing full-fledged services including project advisory and risk management.”  

     

    This seminar marked the first collaboration between IFFO and the IA. It also demonstrated Hong Kong’s advantages as a comprehensive infrastructure financing and risk management centre. Both organisations will continue to explore cooperation opportunities in promoting the significance of risk management in infrastructure investments and financing.

     

     

    HKMA Infrastructure Financing Facilitation Office
    Insurance Authority
    26 March 2019

     

    About HKMA Infrastructure Financing Facilitation Office (IFFO)
    As part of the HKMA, IFFO’s mission is to facilitate infrastructure investments and their financing by working with a cluster of key stakeholders.

     

    The functions of IFFO are:

    • providing a platform for information exchange and experience sharing;
    • building capacity and knowledge on infrastructure investments and financing;
    • promoting market and product development; and
    • facilitating infrastructure investment and financing flows.

     

    By establishing IFFO, the HKMA can play a valuable role as a catalyst in the facilitation of infrastructure investments and their financings with its mandate to promote Hong Kong as an international financial centre.

     

    For more information about IFFO, please visit http://www.iffo.org.hk.

     

    About Insurance Authority (IA)
    The IA is the independent insurance regulator in Hong Kong responsible for regulating and supervising the insurance industry, for the promotion of the general stability and sustainable development of the industry, and for the protection of existing and potential policy holders.

    To help enterprises from the Mainland, Hong Kong and overseas that participate in projects and other commercial activities related to the Belt and Road Initiative identify and create feasible risk management solutions, the IA announced in December 2018 the launch of the Belt and Road Insurance Exchange Facilitation (BRIEF) platform. BRIEF aims to bring together a cluster of key stakeholders and provide a platform for exchanging intelligence on risk management and insurance, forging alliances and facilitating networking. For details please visit www.ia.org.hk/brief.


  • The HKMA Infrastructure Financing Facilitation Office (IFFO) hosted a workshop on infrastructure finance on 19-20 November, led by Professor Akash Deep of the Harvard Kennedy School and attended by close to 40 senior executives of IFFO partners and firms active in infrastructure financing.
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    20 Nov
    2018

    IFFO hosts infrastructure finance workshop with Professor Akash Deep of Harvard Kennedy School

    The HKMA Infrastructure Financing Facilitation Office (IFFO) hosted a workshop on infrastructure finance on 19-20 November, led by Professor Akash Deep of the Harvard Kennedy School and attended by close to 40 senior executives of IFFO partners and firms active in infrastructure financing.


    The workshop used real-life cases in both emerging and developed markets to demonstrate how various financing structures, risk mitigation techniques and corporate governance measures could enhance the bankability of infrastructure projects. It also discussed ways to manage the complex relationships between various stakeholders in Public-Private Partnerships.


    Attendees to the workshop included project developers and operators, commercial and policy banks, investors and asset managers, professional service firms, and public organisations.


    Mr Eddie Yue, Deputy Chief Executive of the HKMA and Director of IFFO, said, “IFFO is pleased to collaborate with Professor Akash Deep again on capacity building. Through workshops such as this, IFFO can play a useful role to narrow the expectation gaps between public and private sector stakeholders in, and improve the bankability of, emerging market infrastructure projects.”




    HKMA Infrastructure Financing Facilitation Office
    20 November 2018

  • The HKMA Infrastructure Financing Facilitation Office (IFFO) held the second Investors and Debt Financing Roundtables last week (25-26 October). The Roundtables were well attended by representatives of key stakeholders such as institutional investors, multilateral financial institutions, debt financiers and infrastructure project operators. The main themes of the Roundtables were equity and debt financing of infrastructure investment, with particular focus on emerging markets.
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    29 Oct
    2018

    inSight: Exchange Fund’s Investment in Infrastructure – Creating Value by Adopting a Gradual and Prudent Approach
     

    The HKMA Infrastructure Financing Facilitation Office (IFFO) held the second Investors and Debt Financing Roundtables last week (25-26 October). The Roundtables were well attended by representatives of key stakeholders such as institutional investors, multilateral financial institutions, debt financiers and infrastructure project operators. The main themes of the Roundtables were equity and debt financing of infrastructure investment, with particular focus on emerging markets.

     

    During the past two years or so, IFFO has brought together many prominent stakeholders and laid a solid foundation for promoting Hong Kong as a platform for infrastructure investment and financing. Meanwhile, the Exchange Fund has also recently started investing in infrastructure projects under its Long-Term Growth Portfolio (LTGP). In the inSight article “Infrastructure Investment – a Timeless Form of Investment” published last year, I had discussed the reasons why long-term institutional investors are attracted to infrastructure investment. This article discusses the Exchange Fund’s objectives and considerations when investing in infrastructure projects, and explains how we manage the associated risks. I hope this will help the public better understand the Exchange Fund’s approach to this important subject.

     

    The Exchange Fund started investing in private equity and real estate (commonly known as “alternative assets”) under the LTGP in 2009, with the aim to diversify its portfolio, spread the investment risks associated with “traditional assets” (primarily bonds and equities), and enhance long-term return. The LTGP has worked as intended during the past decade, achieving a decent internal rate of return of 13.7% at end-2017 on a since-inception annualised basis.

     

    Since the LTGP comprises assets with lower liquidity, the size of LTGP has been capped at one-third of the Accumulated Surplus of the Exchange Fund to ensure that the Fund has sufficient liquidity for maintaining monetary and financial stability. In 2016, the Government established the HK$220 billion Future Fund and entrusted its management to the HKMA. As around half of the Future Fund’s capital is placed with the LTGP, the total amount of capital available for investment under the LTGP has increased correspondingly. At the end of 2017, the total market value of investments under the LTGP reached HK$235.6 billion (with HK$157.2 billion in private equity and HK$78.4 billion in real estate), or about 5.9% of the Exchange Fund’s total assets.

     

    Diversification into infrastructure to enhance resilience to adverse shocks

     

    Although the US interest rates are on a rising path, the relatively low interest rate environment around the world is unlikely to reverse substantially in the foreseeable future. This has not only resulted in lofty valuations of traditional assets, but also led to strong competition for alternative assets by investors. Should the LTGP only invest in private equity and real estate, it will inevitably overlook some other alternative asset classes that offer great potential. It is therefore important for us to continue broadening the spectrum of asset classes.

     

    Infrastructure is an attractive alternative asset class that generates relatively stable cash flows with low loss ratios. As infrastructure is essential to economic development and people’s livelihood, its returns are less affected by economic cycles and have lower correlation with those of traditional assets. At a time when the valuations of most traditional assets are stretched, the inclusion of infrastructure investment in the portfolio will serve as a hedge, enhancing resilience to adverse economic shocks and reducing volatility of the overall return. Furthermore, the returns of many infrastructure investments are inflation-linked due to franchise arrangement or contract protection, which would help reduce inflation risk.

     

    When making investment decisions, one should consider not only the returns, but also risks. That is why professional investors will combine these two factors and look at “risk-adjusted returns”, which, simply put, are returns net of risks. Some may think that infrastructure investment is risky, but empirical data show that infrastructure investment in general outperforms traditional assets on a risk-adjusted basis.

     

    Because of the attractive attributes mentioned above, many medium- and long-term institutional investors, such as sovereign wealth funds, pension funds and insurance companies, have been increasing their allocation to infrastructure in recent years. These investors, like the Exchange Fund, all seek to achieve stable long-term returns. According to a study by the Organisation for Economic Co-operation and Development (OECD), infrastructure accounted for around 10% of the alternative asset portfolio of pension funds in 2016. In addition, it is increasingly common for long-term investors to treat infrastructure as a separate asset class in their portfolios.

     

    Increasing infrastructure investment in a gradual and prudent manner

     

    After thorough research and preparatory work, the Exchange Fund has begun investing in this asset class in recent years by allocating a small portion of the LTGP to infrastructure projects. Starting off with developed markets where we are more familiar with, we have invested in a renewable energy project in Northern Europe by partnering with renowned global investors. As the infrastructure space in developed markets has become increasingly crowded with declining returns, we have started looking into emerging markets as well. Recently, we have invested in another renewable energy project in South America in partnership with a company with sound track record in emerging market investments.

     

    A multi-pronged approach to manage risks

     

    Undoubtedly, infrastructure investment carries risks that are different from those usually involved in bonds or equities. The political, regulatory and currency risks associated with emerging market projects are also generally higher than those in developed markets. Therefore, when investing in infrastructure projects, we have been very prudent and adopt a multi-pronged approach to assess, mitigate and contain the associated risks by implementing various risk management measures that are commensurate with the projects concerned. These include:

    1. Appropriate allocation – The Exchange Fund’s total infrastructure investments (including commitments) amounts to about US$2.2 billion currently, accounting for only a small portion of the LTGP.
    2. Diversified portfolio – We seek to build a diversified portfolio of infrastructure investment across different regions (both developed and emerging markets), sectors (e.g. transportation, renewable energy), capital structures (both debt and equity investments) and partners to avoid undue concentration.
    3. Due diligence – Before committing to an investment, we must conduct rigorous due diligence, including assessing carefully its financial conditions, growth potential, exit mechanism, risks and other factors, to ensure that the project is commercially viable. Priority is accorded to jurisdictions with proper governance and environmental protection framework. Citing the aforementioned project in South America as an example, our investment and risk management teams had to travel across continents to conduct on-site inspection and obtain first-hand information.
    4. Selection of partners – We seek to partner with reputable and experienced institutional investors and asset managers to capitalise on their broad and deep expertise. These include international organisations and leading industry operators. We will also ensure that our partners have good integrity and governance standards and are trust-worthy long-term partners of the Exchange Fund.
    5. External advisors – We engage external advisors to provide independent and professional opinions on tax, legal, regulatory, and environmental issues.
    6. Stress testing – We conduct stress testing on projects’ financial assumptions and models to ensure the projects remain resilient amid unfavourable market conditions.
    7. Risk mitigation measures – We assess if appropriate risk mitigation measures should be adopted for the projects, such as arranging insurance against political risk, and currency hedging against foreign exchange risk. At the negotiation stage of legal documentation, we will also secure the requisite governance rights in the projects, including their funding arrangements, operating budget, investment and operation strategies, senior personnel appointments, etc., and ensure we have the participation rights in devising asset disposal plans.
    8. Reference checks – We conduct reference checks with peer investors as external validation of individual partners’ capability and project viability.
    9. Post-investment monitoring – Post-investment monitoring is as important as pre-deal due diligence. We will maintain regular contact with our partners and closely monitor the progress of the projects to identify any potential issues at an early stage.
    10. Stringent gate-keeping – The most important thing is that we will strictly adhere to the above requirements and processes when selecting the projects. We will turn down a project if it fails any of the above requirements, no matter how promising the returns could be.

     

    There have been some recent discussions on whether the Exchange Fund should invest in the “Belt and Road” regions, or co-operate with Mainland state-owned enterprises (SOEs). Let’s take an objective look. There are more than 80 jurisdictions along the “Belt and Road”, covering both developed and emerging markets. Many of them have strong demand for infrastructure development, and some are viewed by seasoned investors with much optimism. It would only be natural that the Exchange Fund ends up investing in projects located in some of these countries. On the other hand, some Mainland SOEs have ample expertise and experience in investing in, constructing and operating overseas infrastructure projects, making them partners of choice for major institutional investors. While the Exchange Fund has yet to partner with any SOE in infrastructure investment, we should not rule out such possibility. When assessing a potential investment in infrastructure project, we look at its commercial viability, reasonableness of returns and the prospect of proper risk management. Every single project, regardless of its location or business partnership, must go through the established mechanism and processes that underpin our robust, professional and objective due diligence and risk management. We are here to create value – assess and select investment projects with prudence and a discerning eye, yet do not tie our own hands and pass up good opportunities.

     

    Safeguarding the wealth of Hong Kong people is of the essence in managing the Exchange Fund. We will continue to adhere to the investment principle of ensuring “Capital Preservation First, Long-Term Growth Next”. While remaining prudent, we will also be flexible and proactive in managing the Exchange Fund with a view to achieving a better long-term return.

     

    Eddie Yue
    Deputy Chief Executive
    Hong Kong Monetary Authority

     

  • The HKMA Infrastructure Financing Facilitation Office (IFFO) held the second Investors and Debt Financing Roundtables on 25 - 26 October 2018, attended by more than 70 senior representatives from international long-term institutional investors, debt financiers, multilateral financial institutions, project owners and developers, and other key stakeholders in infrastructure financing.
    IDFR
    IDFR_001 
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    26 Oct
    2018

    IFFO holds second Investors and Debt Financing Roundtables
     

    The HKMA Infrastructure Financing Facilitation Office (IFFO) held the second Investors and Debt Financing Roundtables on 25 - 26 October 2018, attended by more than 70 senior representatives from international long-term institutional investors, debt financiers, multilateral financial institutions, project owners and developers, and other key stakeholders in infrastructure financing.

     

    The main themes of this year’s Roundtables included collaboration and co-investment in emerging markets, and recent innovations to enhance bankability of infrastructure projects, making use of case studies. The Debt Financing Roundtable also discussed IFFO’s Reference Term Sheet for Non-Recourse Infrastructure Loans in Emerging Markets, which sets out the basic criteria and financiers’ preferences in respect of infrastructure loans’ legal framework, compliance with environmental, social and governance standards, risk mitigation measures and financial structuring. The term sheet is aimed to provide project owners and developers with a tool to make their projects more “bankable” and to facilitate private sector financing into projects in emerging markets.

     

    Mr Norman Chan, Chief Executive of the HKMA, hosted the two Roundtables. He said, “I am pleased to see the continued strong interest from public and private sector stakeholders at the IFFO Roundtables in infrastructure investments. The discussions on co-investment experiences and on measures that would make infrastructure projects more bankable or investible were very timely. IFFO will continue to serve as a facilitator and catalyst for more effective capital flows into infrastructure projects in emerging market economies.”

     

    IFFO also announced that five new institutions have joined as partners, bringing the total number of IFFO partners to 95. The new partners are (in alphabetical order):

     

    1. Australia and New Zealand Banking Group Limited
    2. CRRC Corporation Limited
    3. European Bank for Reconstruction and Development
    4. Hong Kong Mortgage Corporation Limited
    5. OMERS

     

    HKMA Infrastructure Financing Facilitation Office
    26 October 2018

     

  • The Hong Kong Monetary Authority (HKMA) and the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) co-organised the ‘Connecting Belt & Road, Capturing Opportunities Together’ High-level Roundtable, in Hong Kong on 15 – 16 August 2018..
    CBRCOT
    CBRCOT_001 
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    16 Aug
    2018

    HKMA and SASAC Co-organise 'Connecting Belt & Road, Capturing Opportunities Together' High-level Roundtable
     

    The Hong Kong Monetary Authority (HKMA) and the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) co-organised the ‘Connecting Belt & Road, Capturing Opportunities Together’ High-level Roundtable, in Hong Kong on 15 – 16 August 2018. The event aimed to conduct in-depth discussions on how Hong Kong could facilitate Central State-owned Enterprises’ (CSoEs) investment and expansion in Belt & Road countries.

     

    The High-level Roundtable covered how Hong Kong could leverage its strategic role and unique advantages in Mainland China’s reform and opening up, and assist CSoEs in their infrastructure investment, financing and development in the Belt & Road region. It also explored with leading international institutional investors on the bankability and risk management of Belt & Road infrastructure project financing, and looked at the role that the HKMA Infrastructure Financing Facilitation Office (IFFO) could play in assisting CSoEs in pursuing their overseas projects. The event was the first of its kind in bringing together some 40 senior officials from SASAC and 10 CSoEs, as well as high-level representatives from the financial and professional service sectors in Hong Kong. Mr Paul Chan, the Financial Secretary of the Hong Kong SAR Government, also hosted a cocktail reception to welcome the participating guests.

     

    Mr Norman Chan, Chief Executive of the HKMA said, “Hong Kong has always been a springboard and hub for Mainland enterprises’ ‘going-out’. Hong Kong offers both comprehensive and full-fledged financial platform and professional services, creating a conducive environment for business. The Roundtable also provides a new forum for high-level representatives from both CSoEs and relevant sectors in Hong Kong to exchange views and experiences. We are very grateful to SASAC’s support and encouragement to CSoEs in making greater use of Hong Kong as a platform for overseas development. We look forward to continuing to work closely with SASAC in future to strengthen the communication and cooperation between CSoEs and the Hong Kong business community, with a view to exploring development opportunities together.”

     

    Mr Yan Xiaofeng, Secretary General of SASAC said, “SASAC attaches great importance to the cooperation between CSoEs and the various sectors in Hong Kong. When participating in the Belt & Road Initiative, many CSoEs have been actively leveraging the advantages of Hong Kong’s platform to expand overseas markets. It is expected that the CSoEs will continue to strengthen cooperation with the different sectors of Hong Kong, and focus their keen and precise effort in pursuing the “Three Joints” and “Five Areas of Connectivity”1, giving full play to the respective strengths of all concerned while focusing on the key areas of development to collaborate creatively to achieve prosperous growth together through deeper cooperation with the Belt & Road countries at higher levels.”

     

     

    Hong Kong Monetary Authority
    16 August 2018


    1“Three Joints” refer to the principle of achieving shared growth through discussion and collaboration; “Five Areas of Connectivity” refer to policy co-ordination, facilities connectivity, unimpeded trade, financial integration and people-to-people bond.

  • The Hong Kong Monetary Authority (HKMA) Infrastructure Financing Facilitation Office (IFFO) hosted a presentation session with the Global Infrastructure Facility (GIF) of the World Bank Group on 18 July in Hong Kong.
    WBGGIF
    18 Jul
    2018

    IFFO and World Bank Group’s GIF demonstrate commitment to making infrastructure projects bankable
     

    The Hong Kong Monetary Authority (HKMA) Infrastructure Financing Facilitation Office (IFFO) hosted a presentation session with the Global Infrastructure Facility (GIF) of the World Bank Group on 18 July in Hong Kong. At the seminar, the GIF discussed its role as a global collaborative platform and presented its project portfolio to more than 100 representatives from the private sector, including bankers, project finance experts and project operators.

     

    Housed in the World Bank Group, the GIF serves as a platform through which governments collaborate with multilateral development banks and private sector investors to design, structure and implement complex infrastructure projects in emerging economies. GIF’s private sector partners represent more than US$13 trillion in assets and include pension funds, sovereign wealth funds, insurance companies, fund managers and commercial banks. IFFO joined GIF as an Advisory Partner in March 2018.

     

    Private capital participation is the key to bridge the infrastructure financing gap. In today’s seminar, the GIF discussed its role in creating bankable infrastructure projects to further leverage private sector mobilisation. The presenters also discussed active projects in Tunisia and Vietnam to highlight the GIF’s support in designing and preparing complex infrastructure projects.

     

    This event is another example of IFFO’s commitment in promoting deal facilitation in infrastructure investments and financing, and the high turnout at this event shows that the key stakeholders are keen to contribute to the development by using the Hong Kong platform.

     

    HKMA Infrastructure Financing Facilitation Office
    Global Infrastructure Facility
    18 July 2018

     

     

    About IFFO
    As part of the HKMA, IFFO’s mission is to facilitate infrastructure investments and their financing by working with a cluster of key stakeholders. The functions of IFFO are:

     

    • providing a platform for information exchange and experience sharing;
    • building capacity and knowledge on infrastructure investments and financing;
    • promoting market and product development; and
    • facilitating infrastructure investment and financing flows.

     

    By establishing IFFO, the HKMA can play a valuable role as a catalyst in the facilitation of infrastructure investments and their financings with its mandate to promote Hong Kong as an international financial centre.

     

    For more information about IFFO, please visit http://www.iffo.org.hk.

     

     

    About the Global Infrastructure Facility (GIF)
    The GIF is a partnership of governments, multilateral development banks and private sector financiers that facilitates private-sector investment in complex infrastructure projects in emerging economies. Established in March 2015, the GIF serves as a platform through which governments collaborate with international financial institutions and private sector investors to design, structure and implement these complex projects. The broad partnership ensures that well-structured and bankable infrastructure projects are brought to market in a way that meets the needs of governments and service users in a sustainable way. For more information, please visit http://www.globalinfrafacility.org.

     

  • The Hong Kong Monetary Authority (HKMA) Infrastructure Financing Facilitation Office (IFFO) took part in the third Belt and Road Summit today (28 June) by hosting a panel discussion on “Risk Mitigation in Infrastructure Financing”.
    RMIF
    RMIF_001 
    28 Jun
    2018

    IFFO hosts panel discussion on Risk Mitigation in Infrastructure Financing at the Belt and Road Summit and announces three new partners
     

    The Hong Kong Monetary Authority (HKMA) Infrastructure Financing Facilitation Office (IFFO) took part in the third Belt and Road Summit today (28 June) by hosting a panel discussion on “Risk Mitigation in Infrastructure Financing”. The panel discussion attracted over 1,000 Hong Kong, Mainland China and overseas participants.

     

    Given the vast infrastructure financing needs, attracting private sector capital is crucial. However, participation of private sector capital in infrastructure financing in these economies have been limited due to concerns over different types of risks, such as political and legal risks at country level as well as construction, operation and financial risks at project level. Therefore, properly mitigating these risks is most critical to improving the bankability of infrastructure projects. The panel looked into these risk factors hindering private sector capital’s participation and discussed the corresponding mitigation solutions.

     

    The Panel Discussion was moderated by Mr Eddie Yue, Deputy Chief Executive of the HKMA and Director of IFFO and attended by the following guests (in alphabetical order of organisation name) as speakers: Mr Ian Chung, PRC Leader & Senior Vice President, Asia Pacific, AECOM; Mr Geert Peeters, Executive Director & Chief Financial Officer, CLP Holdings Limited; Ms Wen Hong, Chief Representative, Hong Kong Representative Office, The Export-Import Bank of China; Mr Mark Moseley, Chief Operating Officer, Global Infrastructure Hub; Mr James Cameron, Co-Head of Infrastructure and Real Estate Group, Asia-Pacific, The Hongkong and Shanghai Banking Corporation Limited and Mr Tim Warren, Head of Credit Lines, Asia Pacific, Zurich Insurance Company Ltd.

     

    IFFO also announced 3 new organisations joining as partners, bringing the total number of IFFO partners to 90. The inclusion of the new partners further strengthened IFFO’s mission in facilitating infrastructure investments and financing through working with a cluster of key stakeholders. The new partners are (in alphabetical order):

     

    1. China State Construction Engineering Corporation Limited
    2. Global Infrastructure Facility
    3. State Development & Investment Corp., Ltd.

     

    HKMA Infrastructure Financing Facilitation Office
    28 June 2018

     

     

    About IFFO
    As part of the HKMA, IFFO’s mission is to facilitate infrastructure investments and their financing by working with a cluster of key stakeholders. The functions of IFFO are:

     

    • providing a platform for information exchange and experience sharing;
    • building capacity and knowledge on infrastructure investments and financing;
    • promoting market and product development; and
    • facilitating infrastructure investment and financing flows.

     

    By establishing IFFO, the HKMA can play a valuable role as a catalyst in the facilitation of infrastructure investments and their financings with its mandate to promote Hong Kong as an international financial centre.

     

    For more information about IFFO, please visit http://www.iffo.org.hk.

     

  • More than 150 bankers, project finance experts, risk officers and professionals attended a seminar jointly organised by The Hong Kong Association of Banks (HKAB) and the HKMA Infrastructure Financing Facilitation Office (IFFO) today (15 May 2018) to explore sustainable infrastructure financing opportunities under the Belt and Road Initiative.
    BSBR
    BSBR_001 
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    15 May
    2018

    HKAB and IFFO host seminar on “Building a Sustainable Belt and Road - Hong Kong’s Pivotal Role to Play”
     

    More than 150 bankers, project finance experts, risk officers and professionals attended a seminar jointly organised by The Hong Kong Association of Banks (HKAB) and the HKMA Infrastructure Financing Facilitation Office (IFFO) today (15 May 2018) to explore sustainable infrastructure financing opportunities under the Belt and Road Initiative.

     

    The Belt and Road Initiative aims to build connectivity, which can help foster economic growth and regional cooperation. With growing interest from the private sector to capitalise on Belt and Road opportunities, this year’s seminar was designed to raise awareness and promote participation of Hong Kong banks in Belt and Road projects.  In line with Hong Kong’s commitment to sustainability, the seminar also put a spotlight on financially sustainable and environmentally friendly projects along the Belt and Road countries.

     

    Mr Vincent Lee, Executive Director (External) of the Hong Kong Monetary Authority and Deputy Director of IFFO, said, “We are pleased to work with HKAB again to co-host this year’s seminar.  Today’s discussion clearly highlights the strengths of Hong Kong’s platform in facilitating infrastructure financing and investments, and our credentials as a premier centre for green finance in the region.  Going forward, IFFO will continue to work with private and public sector stakeholders closely to facilitate more bankable and sustainable infrastructure projects.”

     

    Ms Diana Cesar, Chairperson of HKAB and Chief Executive, Hong Kong, HSBC said, "Financing the colossal investment needs of economies in Asia and beyond will require all available sources of capital. Hong Kong banks are in a unique position to connect enterprises engaged in Belt and Road projects with capital, advice and other solutions.  Hong Kong’s focus on green financing can also support China’s aim of building a sustainable New Silk Road. This seminar brings together 60 financial institutions and businesses that can benefit from, and contribute to, economic development along the Belt and Road routes. The Hong Kong Association of Banks is pleased to be part of this mission in regional cooperation."

     

    The seminar featured keynote speeches, presentations and a panel discussion on “Infrastructure Financing and Sustainability: Opportunities and Challenges” by bankers and insurance practitioners.  The high turnout at this seminar shows that the Hong Kong banking community is keen to contribute to the sustainable development of the Belt and Road Initiative.

     

    HKMA Infrastructure Financing Facilitation Office
    The Hong Kong Association of Banks
    15 May 2018

     

     

    About HKMA Infrastructure Financing Facilitation Office (IFFO)
    As part of the HKMA, IFFO’s mission is to facilitate infrastructure investments and their financing by working with a cluster of key stakeholders.

     

    The functions of IFFO are:

     

    • providing a platform for information exchange and experience sharing;
    • building capacity and knowledge on infrastructure investments and financing;
    • promoting market and product development; and
    • facilitating infrastructure investment and financing flows.

     

    By establishing IFFO, the HKMA can play a valuable role as a catalyst in the facilitation of infrastructure investments and their financings with its mandate to promote Hong Kong as an international financial centre.

     

    For more information about IFFO, please visit http://www.iffo.org.hk.

     

     

    About Hong Kong Association of Banks (HKAB)
    The Hong Kong Association of Banks ("HKAB") was created by The Hong Kong Association of Banks Ordinance, Cap.364 ("Ordinance") in 1981 to replace the Exchange Banks' Association. The Ordinance provides a framework for the Government to exchange views with the banking sector for the further development of the industry.

     

    Roles of HKAB include:

     

    • to promote the interests of fully licensed banks in Hong Kong and after consultation with the Financial Secretary to make rules for the conduct of banking business;

    • to be a focal point for consultation on law reform, new legislation and regulatory matters;

    • to form a sounding-board for the Government and other relevant bodies on general business and banking issues;

    • to offer a channel of communication among its members and with third parties; and

    • to promote best practice to members and provide information service.

     

    For more information about HKAB, please visit http://www.hkab.org.hk

     

  • The HKMA Infrastructure Financing Facilitation Office (IFFO) hosts a two-day executive workshop on 27-28 March, co-organised by International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA).
    GIFAP
    GIFAP_001 
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    27 Mar
    2018

    IFFO hosts executive workshop with IFC and MIGA and announces joining GIF as Advisory Partner
     

    The HKMA Infrastructure Financing Facilitation Office (IFFO) hosts a two-day executive workshop on 27-28 March, co-organised by International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA).

     

    The workshop is attended by over 40 senior professionals from a diverse mix of background across Hong Kong, Mainland China and overseas including institutional investors, banks, asset managers, insurance companies and infrastructure project developers and operators.

     

    Private sector participation in project finance is critical to narrowing the huge infrastructure funding gap in emerging markets.  In this workshop, titled “Private Participation in Infrastructure Project Finance and Risk Mitigation”, IFC and MIGA use real life examples to demonstrate how to improve project bankability, for example through the application of relevant products such as insurance, and identifying, managing and mitigating key risks throughout the project life cycle.

     

    IFFO, since its launch in 2016, has organised numerous workshops on infrastructure financing. Today’s executive workshop is a further demonstration of IFFO’s commitment in promoting capacity building in infrastructure investments and financing.

     

    IFFO is also pleased to announce that it has recently joined the Global Infrastructure Facility (GIF) as an Advisory Partner, contributing to the World Bank Group and international efforts to help make more infrastructure projects bankable. With IFFO’s vast network of partners, it could help support GIF’s work by providing new perspectives in facilitating infrastructure financing.  

     

    GIF, housed in the World Bank Group, serves as a platform through which governments collaborate with multilateral development banks and private sector investors to design, structure and implement complex infrastructure projects in emerging economies.

     

     

    HKMA Infrastructure Financing Facilitation Office
    International Finance Corporation
    Multilateral Investment Guarantee Agency
    27 March 2018

     

    About HKMA Infrastructure Financing Facilitation Office (IFFO)
    As part of the HKMA, IFFO’s mission is to facilitate infrastructure investments and their financing by working with a cluster of key stakeholders.

     

    The functions of IFFO are:

    • providing a platform for information exchange and experience sharing;
    • building capacity and knowledge on infrastructure investments and financing;
    • promoting market and product development; and
    • facilitating infrastructure investment and financing flows.

     

    By establishing IFFO, the HKMA can play a valuable role as a catalyst in the facilitation of infrastructure investments and their financings with its mandate to promote Hong Kong as an international financial centre.

     

    For more information about IFFO, please visit http://www.iffo.org.hk.

     

    About International Finance Corporation (IFC)
    IFC - a sister organization of the World Bank and member of the World Bank Group - is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, using our capital, expertise and influence to create markets and opportunities in the toughest areas of the world. In FY17, IFC delivered a record US$19.3 billion in long-term financing for developing countries, leveraging the power of the private sector to help end poverty and boost shared prosperity. For more information, visit http://www.ifc.org.

     

    About Multilateral Investment Guarantee Agency (MIGA)
    MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war & civil disturbance; and offering credit enhancement to private investors and lenders. In FY17, MIGA issued a record US$4.8 billion in guarantees, helping draw in some $15.9 billion in foreign private capital to developing countries. For more information, visit http://www.miga.org.

     

    About Global Infrastructure Facility (GIF)
    The GIF is a partnership of governments, multilateral development banks and private sector financiers that facilitates private-sector investment in complex infrastructure projects in emerging economies. Established in March 2015, the GIF serves as a platform through which governments collaborate with international financial institutions and private sector investors to design, structure and implement these complex projects. The broad partnership ensures that well-structured and bankable infrastructure projects are brought to market in a way that meets the needs of governments and service users in a sustainable way.
    For more information, please visit http://www.globalinfrafacility.org/

     
  • Over 600 political and business leaders gathered at the Great Hall of the People in Beijing to attend the seminar…
    CE2018
    CE2018_001 
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    8 Feb
    2018

    InSight: Hong Kong’s strategic position of “leveraging on the Mainland while engaging the world”
     

    Over 600 political and business leaders gathered at the Great Hall of the People in Beijing to attend a seminar entitled “Strategies and Opportunities under the Belt and Road Initiative - Leveraging Hong Kong's Advantages, Meeting the Country's Needs”, held by the Government of the Hong Kong Special Administrative Region last Saturday (3 February). I participated in the first thematic session with a theme of “Riding on Hong Kong's capital market when taking forward the Belt and Road developments”. During the discussion, I pointed out Hong Kong’s strategic position of “leveraging the Mainland while engaging the world”. In my opinion, this strategic position, which has remained unchanged for more than a hundred years since the opening up of Hong Kong in 1842, will not be changed for the years to come.

     

    Hong Kong evolved from a small fishing village into an entrepot in the nineteenth century. Foreign merchants and Chinese compradors gathered at this small place to conduct various trading and purchasing activities. Hong Kong acted as an entrepot, importing goods into the Mainland and exporting goods overseas. Demand for trade finance arose on the back of the flourishing trading activities. In the past, as goods needed to be shipped to their destinations, it could take several months or up to a year from purchasing goods, on-selling to customers, to receiving proceeds by merchants. This gave rise to demand for intermediary financing, attracting foreign banks to commence business in Hong Kong, in addition to local banks. The co-existence of foreign and Chinese businesses and banks was the early model of “leveraging the Mainland while engaging the world” for Hong Kong.

     

    China began its economic reform in the late 70s. With the advantage of “leveraging the Mainland”, Hong Kong succeeded in transforming away from reliance on low-skill light industries, which was gradually losing competitiveness, in the 60s and 70s. Throughout the four decades of reform and opening up in China, Hong Kong has served as the main source of and springboard for channeling “funds” and “technology” into the Mainland, accounting for 50-60% of all foreign direct investment (FDI) flows. In 2016, China’s total FDI amounted to US$133.7 billion, 61% of which was contributed by Hong Kong. On the other hand, with years of economic reform and upgrading, Mainland enterprises have accumulated substantial amount of capital and are becoming competitive in the international arena. This in turn created opportunities for them to “go global”. China began to expand the size of outward direct investment (ODI) ten years ago. In 2016, its total ODI reached US$196.1 billion, nearly 60% of which was invested in Hong Kong or channeled to other regions for investment through Hong Kong. This reflects Hong Kong’s role as the hub and springboard for Mainland’s capital to “go global”.

                                   

    Have you ever considered why Hong Kong is the preferred gateway for Mainland capital to “go global”? In my view, compared with other international commercial and financial centres, Hong Kong has three unique advantages that attract Mainland enterprises to set foot in the city for developing their businesses and managing their overseas operations.

     

    (1)  

    Geographic location: Hong Kong’s geographic proximity to the Mainland allows easy access to the huge markets and population on the Mainland. At the same time, Hong Kong has comprehensive and efficient links to other major commercial and financial centres all over the world;

    (2)  

    One country, two systems: Under the “one country, two systems” principle implemented in Hong Kong, the Central Government fully supports Hong Kong in maintaining prosperity and stability. Enjoying the benefits of “one country, two systems”, Hong Kong is a hub for international trade, financial activities and modern services;

    (3)  

    The common law is applied in Hong Kong. This is conducive to international trade, investment and financing. Among all the places that practise common law, Hong Kong is the only place that truly applies a bilingual system with both Chinese and English as our official languages. This provides a unique legal and judicial system for international and Mainland enterprises.

     

    It is nearly impossible for other commercial and financial centres to duplicate or imitate the three advantages mentioned above. As of March 2017, there were nearly 4,000 Mainland enterprises in Hong Kong with total assets amounting to HK$20 trillion. Many of these Mainland enterprises have established their regional headquarters for overseas operations in Hong Kong. Recently, they have also set up their corporate treasury centres (CTCs) here to leverage on our advantages, including highly efficient financial markets, the world’s largest offshore renminbi (RMB) business centre, world-class financial and related professional talents, to enhance their operational efficiency and risk management standards.

     

    Since the introduction of tax incentives for CTCs in 2016 through amendments to the Inland Revenue Ordinance, which lowered the tax rate for CTCs from 16.5% to 8.25%, the HKMA has been actively promoting Hong Kong as the preferred location for CTCs to multinational and Mainland corporates. Over 40 companies, many of which are among the Fortune 500 companies, are actively considering setting up or have already set up CTCs in Hong Kong.

     

    In his keynote speech at the seminar, Mr Zhang Dejiang, Chairman of the Standing Committee of the National People’s Congress, said, “The Central Government strongly supports the important role of Hong Kong in implementing the ‘Belt and Road’ Initiative, which has been incorporated into the overall development plan for the country”. I believe that “Belt and Road” investments and RMB internationalisation will go hand in hand with positive interaction. It is because with China’s increasing foreign investment and trading activities with other jurisdictions, the use of the RMB will grow in tandem. Hong Kong is the world's largest offshore RMB business centre and payment and settlement hub. At present, around 70% of global RMB payment transactions are handled via Hong Kong, with its RMB Real Time Gross Settlement system’s turnover averaging RMB900 billion daily. Hong Kong can provide one-stop offshore RMB services, including conversion, settlement, lending, debt issuance, public listing, asset and risk management for all “Belt and Road” regions and stakeholders. Besides, as “Belt and Road” infrastructure investments and financing may be priced and transacted in RMB, the progress of RMB internationalisation will accelerate. RMB internationalisation and the “Belt and Road” Initiative therefore complement each other. Throughout the process, Hong Kong can ride on its strengths to continue to play a unique intermediary role and enjoy early-mover advantage.

     

    Talking about the “Belt and Road” Initiative, I must mention the HKMA Infrastructure Financing Facilitation Office (IFFO). Since its establishment in July 2016, we have brought together 87 partners from the Mainland and overseas, including multilateral organisations, major institutional investors, infrastructure project developers and operators, professional service firms, etc, to jointly look for infrastructure investment and financing opportunities along the “Belt and Road” regions. The platform provided by IFFO can give full play to Hong Kong's edge in “leveraging the Mainland while engaging the world”. By facilitating more infrastructure investment and financing activities through the Hong Kong platform, more business opportunities will come to the city. With the support of the State-owned Assets Supervision and Administration Commission of the State Council, we are now in discussions with some Central State-owned Enterprises to explore opportunities for cooperation and joint investment, and there has been good progress. We look forward to some joint investment projects in the future to bring in international capital and achieve a win-win situation. China is the most vibrant economy in the world. “Leveraging the Mainland while engaging the world” has always been the bedrock for Hong Kong’s economic and financial development, whether in the past, at present or in the future. Looking back, as long as Hong Kong sets its direction firmly and strive unremittingly, grasping the huge opportunities offered by the “Belt and Road” Initiative and the development of the Guangdong-Hong Kong-Macao Bay Area under the strategy of “Leveraging Hong Kong's Advantages, Meeting the Country's Needs”, we will be able to contribute to the country’s prosperity as well as our own.

     

    Norman Chan
    Chief Executive
    Hong Kong Monetary Authority
    8 February 2018

  • The HKMA Infrastructure Financing Facilitation Office (IFFO) announced today that nine new entities have joined as IFFO partners.
    NPIFFO
    16 Jan
    2018

    Nine New Partners joining IFFO
     

    The HKMA Infrastructure Financing Facilitation Office (IFFO) announced today that nine new entities have joined as IFFO partners.  They are (in alphabetical order):

     

    1. Beijing Jingneng Clean Energy Corporation Limited
    2. China Communications Construction Company Limited
    3. China Datang Corporation Ltd.
    4. China Energy Conservation and Environmental Protection Group
    5. China Energy Engineering Corporation Limited
    6. China Huadian Hongkong Company Limited
    7. Taikang Asset Management Company Limited
    8. Teachers Insurance and Annuity Association of America
    9. Xinjiang Goldwind Science & Technology Co., Ltd.

     

    Today’s announcement brings the total number of IFFO partners to 87, and will help to grow IFFO further as an effective platform for experience sharing and networking among key stakeholders in infrastructure investment and financing. 

     

    Hong Kong Monetary Authority
    16 January 2018

     

    About IFFO
    As part of the HKMA, IFFO’s mission is to facilitate infrastructure investments and their financing by working with a cluster of key stakeholders.

     

    The functions of IFFO are:

    • providing a platform for information exchange and experience sharing;
    • building capacity and knowledge on infrastructure investments and financing;
    • promoting market and product development; and
    • facilitating infrastructure investment and financing flows.

     

    By establishing IFFO, the HKMA can play a valuable role as a catalyst in the facilitation of infrastructure investments and their financings with its mandate to promote Hong Kong as an international financial centre.

     

    For more information about IFFO, please visit http://www.iffo.org.hk.

  • Mr Norman Chan, Chief Executive of the Hong Kong Monetary Authority (HKMA), led the Policy Dialogue on “Impact of China Policies on Global Economic Development” at the 2018 Asian Financial Forum (AFF) today, attracting over 2,000 overseas and local industry representatives.
    AFFPD
    AFFPD_001 
    Photo
    15 Jan
    2018

    HKMA Chief Executive leads Policy Dialogue on Impact of China Policies on Global Economic Development
     

    Mr Norman Chan, Chief Executive of the Hong Kong Monetary Authority (HKMA), led the Policy Dialogue on “Impact of China Policies on Global Economic Development” at the 2018 Asian Financial Forum (AFF) today, attracting over 2,000 overseas and local industry representatives.

     

    The Policy Dialogue comprised prominent speakers including (in alphabetical order of organisation name) Mr Jin Liqun, President of the Asian Infrastructure Investment Bank; Mr Hu Huaibang, Chairman of the China Development Bank; Dr Andreas Dombret, Member of the Executive Board of the Deutsche Bundesbank; Mr Stuart Gulliver, Group Chief Executive of HSBC Holdings plc and Mr David Lipton, First Deputy Managing Director of the International Monetary Fund.

     

    As the world’s second largest economy, China has been playing an increasingly crucial role in shaping global economic dynamics. The Policy Dialogue, moderated by Mr Chan, discussed the impact of various Chinese policy initiatives including renminbi internationalisation, capital account reform and the Belt and Road Initiative on global economic and market developments.

     

    Hong Kong Monetary Authority
    15 January 2018

  • Mr Norman Chan, Chief Executive of the Hong Kong Monetary Authority (HKMA), visited China Development Bank (CDB) today and met with its President Mr Zheng Zhijie. Mr Chan welcomed CDB’s issuance of its first Belt and Road bond in Hong Kong to finance projects across Belt and Road countries.
    HKMAWCDB
    HKMAWCDB_001 
    Photo
    20 Dec
    2017

    HKMA welcomes China Development Bank’s issuance of its first Belt and Road bond in Hong Kong
     

    Mr Norman Chan, Chief Executive of the Hong Kong Monetary Authority (HKMA), visited China Development Bank (CDB) today and met with its President Mr Zheng Zhijie.  Mr Chan welcomed CDB’s issuance of its first Belt and Road bond in Hong Kong to finance projects across Belt and Road countries.

     

    “CDB has been an anchor partner of the HKMA Infrastructure Financing Facilitation Office (IFFO), and a Memorandum of Understanding (MoU) was signed between the HKMA and CDB last December to foster closer collaboration via IFFO,” said Mr Chan.  “This first ever issuance of Belt and Road bond by CDB in Hong Kong underscores the pivotal role that Hong Kong can play in facilitating the financing of infrastructure projects in the region.” 

     

    Established by the HKMA in July 2016, IFFO is committed to facilitating infrastructure investments and their financing by working with a cluster of key regional and international stakeholders. As of today, IFFO has 78 partners.

     

    About IFFO
    As part of the HKMA, IFFO’s mission is to facilitate infrastructure investments and their financing by working with a cluster of key stakeholders. The functions of IFFO are:

     

    • to provide a platform for information exchange and experience sharing;
    • to build capacity and knowledge on infrastructure investments and financing;
    • to promote market and product development; and
    • to facilitate infrastructure investment and financing flows.

     

    By establishing IFFO, the HKMA can play a valuable role as a catalyst in the facilitation of infrastructure investments and their financings with its mandate to promote Hong Kong as an international financial centre.

     

    For more information about IFFO, please visit http://www.iffo.org.hk.

     

    Hong Kong Monetary Authority
    20 December 2017

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