A Window of Opportunity Into Asia's Key Markets

A Window of Opportunity into Asia’s Key Markets Dr Jimmy Chiang Associate Director-General of Investment Promotion 2 June 2020

. Latest Update about Hong Kong

. Fundamental Strengths

. New Opportunities Latest Update about Hong Kong Economic Performance and Forecast

GDP Growth Economic Unemployment Trade Forecast + 5.2% Import: - 10% - 8.9% - 7% to - 4% Export: - 9% (Q1 2020) (2020) (Feb-Apr 2020) (Q1 2020)

4 COVID-19 in Hong Kong is under control

2 1 5

1. (24 Jan) Suspending flights and High Speed Rail Services between HK and Wuhan 2. (4 Feb) Leaving only two land boundary control points in service i.e. Shenzhen Bay Port and HK-Zhuhai-Macao Bridge HK Port 3. (17 Mar) Issuing the Red OTA on all overseas countries/territories and issuing quarantine orders to people arriving HK 4. (27 Mar) Closing 6 types of premises and prohibiting gatherings of >4 people in a public place 5. (5 May) Increasing the number of persons allowed in group gatherings from 4 to 8 and reopening of certain types of business premises Statistics updated as at 31 May 2020 Sources: Center for Health Protection, Department of Health Relief Measures Cash Flow Support Sector-specific . 100% Guarantee Low-interest Support Loan Job Retention Tourism Catering Retail Education Transport . Employment Support Scheme

Creative Real Financial Other Sectors Industries Estate Services Ordered to Close USD 37 bn

Counter-cyclical Relief Package and Anti-epidemic Fund

6 Fundamental Strengths Hong Kong is Well Placed for Businesses of All Sizes to Grow

Open & Free Market Rule of Law Simple & Low Tax

• No barrier to trade • Legal system is • Low, simple and (tariffs and quotas) underpinned by an stable tax regime independent judiciary • No restrictions on inward • Tax rate at 8.25% for & outward investments • The only common law the first $2M profit jurisdiction in China operating both and 16.5% for Chinese and English remaining

Excellent Accessibility Global Financial Centre Strong Fiscal Reserves

• 75+ of top 100 banks • HK International Airport: • In 2020, HK has world busiest & best in the world approx. USD 128 bn airport, reaching half • No.1 IPO centre 7 of fiscal reserves world’s population within times in 11 years 5-hr flight • No.1 asset • HK-Zhuhai-Macao Bridge management hub in • Express Rail Link Asia New Opportunities Digital Delivery of Traditional Services

Commercial 5G services in Hong Kong was launched as of 1 April 2020

Photo credit : Marketing Interactive, SCMP Fast Growing Startup Hub

. Skyrocketed in the last few years . Strong network of incubators and accelerators . A pool of experienced angels and venture capitalists . A range of government backed programmes . Welcoming community of startups, knit together by plenty networking events, seminars and associations throughout the year

Number of Startups Number of Staff Employed

4,000 15,000 3,184 12,478 3,000 43% 97% 10,000 2,229

2,000 6,320

5,000 1,000

0 0 2017 2019 2017 2019

Source: 2019 Startup Survey Lower Cost Structure Latest Forecast of Rental Market in Hong Kong

-13.6% -15% -10to-5% Office Retail Residential

Note: Year-on-year / End 2020 Note: High Street Shops, Hong Kong Note: Luxury rents in Hong Kong Source: Colliers Prime Retail Indicator - % Change Source: Savills Source: Jones Lang LaSalle (JLL) Fund Raising through IPO

Global IPO Funds Raised in 2019 HK Market Total IPO Funds Raised by Year

# of Funds Raised # Exchange IPO (US$ bn) Total IPO Fund IPO Performance # of IPO Raised “US$ bn" 1 Hong Kong 183 40.1 2 Shanghai 122 26.9 70 250 #1 #1 #4 #3 #2 #3 #1 #1 3 NASDAQ 135 26.8 #1 #1 #1 218 4 Saudi Arabia 6 26.7 60 58 5 New York (NYSE) 39 23.3 200 183 6 Shenzhen 75 9.2 50 174 7 London 32 8.0 8 Thailand 29 3.4 138 150 9 Germany 8 3.4 40 40.1 122 126 36.6 10 Paris - Euronext 9 3.3 113 33.5 110 33.9 32 30 30 101 100 Top 5 Exchanges IPO Funds Raised 2010 – 2019 25.2 64 21.8 Hong Kong 307.1 20 73 16.4 NYSE 284.0 50 11.6 NASDAQ 165.6 10

Shanghai 148.7

Shenzhen 135.4 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Total IPO funds raised # of IPOs

HKEX has been ranked first for IPO fundraising globally in seven of the past eleven years

Sources: Dealogic and HKEX data as of 31 Dec 2019 Rapid Development of Bond Market

Issurance of HKD debt instrument (in million) Tapping into China’s Bond Market 4,500,000

4,000,000

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

2005 1998 1999 2000 2001 2002 2003 2004 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: HKEx Year

Green Finance Hub

• Green bonds issued in Hong Kong in 2018 totalled USD11 billion, an increase of 237% from 2017, which was around USD3 billion

• The Financial Secretary announced in the 2018-19 Budget to gear up issuance of government green bonds and a series of supportive measures including:

 Pilot Bond Grant Scheme (PBGS)  Green Bond Grant Scheme (GBGS) Private Wealth Management & Family Office

Hong Kong: A Leading Hub for Family Offices

A leading private wealth Premier international management (PWM) asset management center 01 hub in Asia 02 • Unparalleled access to local & Mainland private equity (PE) • #1 cross-border PWM investments (>50% of Asia centre in Asia Pacific PE deals) • Ideal exit platform – fast • Presence of top 15 growing & dominant fund global private wealth raising centre in Asia managers • Home to 70 of top 100 global money managers and over 500 PE and venture capital Why firms Hong Kong Ideal environment for Family Regional center for Office operations philanthropy and sustainable finance 04 03 • A steadily growing PWM platform under “One Country, • #1 philanthropy centre in Two Systems” with simple & Asia (by % of GDP) low tax regime • Strong government & industry • Comprehensive Green support with ample supply of Finance ecosystem with professional services & talent strong regulator support • Liveable city with unparalleled connectivity to the world Guangdong-Hong Kong-Macao Greater Bay Area

Population1 71 million

Zhaoqing Guangzhou 2 Huizhou Land Area 2 Foshan Dongguan 56,000km Shenzhen Zhongshan Jiangmen Zhuhai GDP3 Macao US$1.6 tr Hong Kong

1 Greater than UK, Italy and South Africa 2 Greater than Ireland, Latvia, Panama 3 Equivalent to Australia, Spain Belt & Road Silk Road Economy Belt

21st Century Maritime Road

Central and Western Asia Europe

Mainland China Mediterranean Sea

Middle East Hong Kong South Asia Indian Ocean Southeast Asia InvestHK’s Services How We Help Companies Grow

Planning Set-up Launch Expansion

. Guidance in strategic . Providing support with . Connecting with . Tools for continuous implementation and business licences, visa lawyers, accountants, expansion evaluation of business applications, human resource decisions trademark registration, specialists, . Ensuring a sustainable IP and trade consultancies, foundation for growth . Advising on living and regulations, etc designers, interior . Continuing to support working in Hong Kong specialists and real across marketing and (housing, healthcare, . Informing on tax and estate companies, etc schooling and business regulations public relations networking, etc) . Providing marketing . Arranging meetings and public relations with service providers, services professional associations and government departments

. Advising on sector- specific industries and opportunities Government Funding Schemes & Support

Research & Hiring Set-up Development

. Enhanced tax deduction for . Waiver of Business . Hong Kong Talent List R&D expenditures Registration Fees . Technology Talent Admission . Enterprise Support Scheme . Incubation Programmes Scheme (TECHTAS) (ESS) . Corporate Venture Fund . Reindustrialisation and . Innovation and Technology Technology Training Support Programme (ITSP) Programme (RTTP) . Partnership Research . Postdoctoral Hub Programme (PRP) . Research And Development Cash Rebate Scheme (CRS)

and many more… Business Expansion / Business Upgrading Development Scan for details: . Trade and Industrial . Innovation and Technology Organisation Support Fund Venture Fund (ITVF) (TSF) . Technology Voucher . Dedicated Fund on Branding, Programme (TVP) Upgrading And Domestic Sales (BUD Fund) . General Support Programme (GSP) . SME Export Marketing Fund Our Local Sector Specialists

Pillar

Business & Financial Services Transport & Industrial Professional Services

Innovation & Technology Lifestyle & Creative

Information & Innovation & Consumer Tourism & Creative Communications Technology Products Hospitality Industries Technology Our Worldwide Network

Gothenburg Moscow London Berlin Brussels Toronto Paris Milan Beijing Istanbul San Francisco New York Seoul Chengdu Shanghai Tokyo Jerusalem Wuhan Osaka Dubai Guangzhou Taipei Hong Kong Mexico City Mumbai Bangkok

Singapore Jakarta

Rio de Janeiro

Santiago Sydney Get in Touch

Jimmy Chiang JChiang@investhk.gov.hk hk.linkedin.com/in/jimmyhlchiang @jimmyhlchiang

Nese Secer Principal Consultant (Istanbul) [email protected]

investhk.gov.hk INVEST_HK

(852) 3107 1000 e.weibo.com/investhk

[email protected] @InvestHK

24/F Fairmont House www.linkedin.com/company/ 8 Cotton Tree Drive invest-hong-kong Central Hong Kong www.youtube.com/user/investhk