Recently, when talking about the changes in Hong Kong in the next 10 years, many people are concerned about the development of the financial market. In particular, the Hong Kong stock market has been relatively sluggish recently. The Hang Seng Index was 12,000 points 20 years ago. Today, the Hang Seng Index is only over 17,000 points. There is no progress. Big, this reminds me of the comments of Shen Liantao, the former chairman of the Hong Kong Securities Regulatory Commission. Earlier at the “International Forum on China’s Economic Operation and Policies” hosted by the Chief Executive’s Policy Group, Shen Liantao was one of the keynote speakers and talked about the development of the stock market and the national economy. relationship of strength.
He mentioned that the economic aggregate of the United States surpassed that of the United Kingdom in 1914, but it was not until 1973 that the U.S. dollar was decoupled from gold and the currency issued by the United States was no longer bound by the “gold standard system” that the U.S. dollar gained full dominance. Shen Liantao mentioned that during the Asian financial crisis in 1997, then-U.S. Federal Reserve Chairman Alan Greenspan told him that in Asia, you only rely on bank loans, but in the United States, there is stock market financing. There is a fundamental difference. Shen Liantao then mentioned the issue of RMB internationalization, saying that the current return on equity (ROE: Return on Equity) of U.S. dollar assets is higher than that of Euro, Japanese yen and RMB. In fact, it is not the return on U.S. bonds that is high, but the high profits of U.S. stocks. Many People who hold U.S. dollar assets have invested in U.S. stocks and received considerable returns, so they are happy to hold U.S. dollar assets. Shen Liantao concluded that if the RMB’s return on net assets is not as high as that of other countries, the RMB will not be able to go global.
Shen Liantao’s analysis involves issues at different levels. First, the stock market has a unique financing function. In addition to holding funds, corporate investment mainly relies on borrowing from banks. However, banks have the characteristic of “collecting everything when it rains”. When the economic environment is poor, credit tightens and banks will not renew loans when they expire, creating a financing trap. . Another company financing channel is to raise funds in the stock market. If the company is successfully listed, whether new shares are listed or additional shares are issued later, it can absorb investment and raise funds from shareholders. The money raised from the stock market does not need to be repaid. It will be distributed as long as the company is doing well. Just dividends. If the economic environment is not good and the company’s performance is poor, shareholders have no right to demand repayment from the listed company. Therefore, the biggest advantage of stock market financing is that companies have no repayment pressure.
China’s stock market is underdeveloped, so mainland companies mainly invest through bank borrowings. Whether it is banks, shadow banks or borrowing through so-called trust products, they are all different forms of borrowing and need to be repaid. They are far less easy than raising funds in the stock market. . Therefore, the financing capacity of the stock market is weak, which greatly restricts the long-term development of enterprises.
Second, returns to foreign holders. For the RMB to become internationalized, it must first become a popular trade currency, then a popular investment currency, and finally the country’s popular reserve currency. As Shen Liantao pointed out, the key to the high return on equity of U.S. dollar assets lies in the stock market. A strong stock market is actually a hidden factor supporting the hegemony of the U.S. dollar. In fact, even if the United States has thousands of nuclear warheads, it will be difficult to convince foreign investors to hold them if the U.S. stock market continues to fall.
Generally speaking, China’s economy will still grow at a rate of 4 to 5% every year in the future. First of all, in terms of the internal economy, corporate financing sources should be diversified. Enlarging and strengthening the mainland stock market will play an important role in supporting economic development. Secondly, if the RMB is to become internationalized, it must also be supported by a strong stock market. Since the mainland has foreign exchange controls, in addition to investing in the mainland stock market, Hong Kong stocks are another alternative for foreign investors. Nowadays, the Hong Kong stock market is facing geopolitical conflicts and financial capital led by the United States is being lost. I should re-plan how to develop and strengthen the Hong Kong stock market. On the one hand, the active Hong Kong stock market can become an alternative for mainland companies to raise foreign exchange funds in Hong Kong. source, there is no need to always go to the U.S. market to raise funds and get stuck; on the other hand, Hong Kong should also expand RMB stock trading so that countries such as Russia, Brazil and Saudi Arabia that may hold large amounts of RMB assets now or in the future can come. Hong Kong investment. When the stock market is booming and the return on investment of RMB assets is high, the internationalization of RMB will naturally come naturally.
Only by making the Hong Kong stock market bigger and prosperous can we effectively serve the development of the country.
“Bus Newspaper” is an online newspaper that allows netizens to
Hold your phone or tablet to see.
www.bastillepost.com
[email protected]
Lu Yongxiong
2023-11-24 16:00:00
#Yongxiong #prosperous #stock #market #Hong #KongBus #reviews
