Hong Kong is widely recognized as one of the world's leading financial centres. It is home to many
local banks, as well as branches of foreign banking institutions. Virtually all
of the main players are here assisting with the huge and growing trading and
capital raising activities, resulting in there being critical mass of talented
professionals, a mature and well respected regulatory framework, and a wide
variety of creative services and products at a competitive price. Banking and
finance is one area where Hong Kong certainly punches above its weight! For more
information on Hong Kong's banking superlatives, click here for further details.
Currency
Hong Kong has a currency - the Hong
Kong dollar - that is freely convertible and has no capital restrictions.
100 cents make up one dollar.
For more than 20 years, the Hong Kong dollar has been pegged to the US dollar,
under the Linked Exchange Rate System. This affords some degree of stability
with the exchange rate fluctuating minimally around the HK$7.8:US$1 pegged
rate.
Hong Kong does not have a central Government bank, so three banks have note
issuing privileges. They are HSBC, Standard Chartered Bank and Bank of China.
The city's currency is different from the Mainland where the Renminbi
(abbreviated to RMB) is used. Renminbi is the generic name for the currency
and the denominations are yuan and fen (1 yuan = 100 fen).
Other major currencies are freely available for purchase at banks and foreign
currency suppliers at market rates. Sometimes a commission will be charged for
the transaction.
Banking
Hong Kong has a
three-tiered structure of deposit-taking institutions. They are licensed
banks, restricted licence banks and deposit taking companies and are
collectively known as authorised institutions (AIs). The Hong Kong Monetary
Authority (HKMA) is the licensing authority for all three types of AIs.
Only licensed banks, commonly known as commercial banks, may operate current
and savings accounts and accept deposits of any size and maturity.
Banking facilities are available to foreign investors on a non-discriminatory
basis. Services typically include:
- deposit accounts of any size and maturity
- loans and advances
- discount trade bills, bankers acceptances,
documentary credits, factoring
- deal in gold, foreign exchange and
securities
- provide business consultative services
- provide private banking services
Hong Kong does not have a central Government
bank, so three banks have note issuing privileges. They are HSBC, Standard
Chartered Bank and Bank of China.
Hong Kong has a robust interbank payment system, which operates through the
Real Time Gross Settlement (RTGS) system. All RTGS payment transactions are
settled in real time across the books of the HKMA thereby reducing or
eliminating foreign exchange settlement risk caused by any time gap. There are
RTGS systems for US dollars and Euro, as well as Hong Kong dollars.
How
to open a bank account
RMB Services
In
2004,
Hong Kong
became the first place outside the Mainland to conduct personal Renminbi (RMB,
the currency of the Mainland) business, including deposit-taking, currency
exchange, remittances and credit cards. Some Hong Kong banks also started
issuing RMB cards to facilitate cross-boundary spending by
Hong Kong
residents.
Funding
Beyond short term loan/debt and trade
finance through banks, foreign enterprises may also look to finance their
operations through venture capital, grants and equity. See below for more
details on each topic.
Venture capital
A stable currency, no capital movement restrictions, low and simple tax
structure and sound regulatory framework have made Hong Kong's venture capital
market thrive.
Hong Kong professionals manage over a quarter of the total venture capital
pool in the Asia Pacific region, with an overwhelming majority of venture
funds coming from overseas and being invested into overseas companies in the
region.
Given the propensity to do business of the resident population and the large
proportion of high net worth individuals in the city, Hong Kong is also ideal
for sourcing business angels.
Hong
Kong Venture Capital and Private Equity Association
Grants
Hong Kong offers no special incentives to overseas investors. The strengths of
Hong Kong are incentive enough!
Click
here for more on Hong Kong's advantages
That said, in keeping with level playing field approach of the government,
overseas investors who own Hong Kong incorporated companies are treated like
their local counterparts and are eligible to apply for a few grants and
special arrangements that are available when specific criteria are met.
Many of these are in the information technology sector, so for more
information,
click here
Other arrangements are administered by the SME division of the Trade and
Industry Department.
For
more information click here
Equity
There are two distinct exchanges in Hong Kong: the Stock Exchange of Hong Kong
and the Growth Enterprise Market (GEM).
Stock Exchange of
Hong Kong
Growth
Enterprise Market
Hong
Kong Venture Capital and Private Equity Association
Grants
Hong Kong offers no special incentives to overseas investors. The strengths of
Hong Kong are incentive enough!
Click
here for more on Hong Kong's advantages
That said, in keeping with level playing field approach of the government,
overseas investors who own Hong Kong incorporated companies are treated like
their local counterparts and are eligible to apply for a few grants and
special arrangements that are available when specific criteria are met.
Many of these are in the information technology sector, so for more
information,
click here
Other arrangements are administered by the SME division of the Trade and
Industry Department.
For
more information click here
Equity
There are two distinct exchanges in Hong Kong: the Stock Exchange of Hong Kong
and the Growth Enterprise Market (GEM).
Stock Exchange of
Hong Kong
Growth
Enterprise Market
