In the development process of Guangdong-Hong Kong-Macao Greater Bay Area, the financial development is undoubtedly a crucial link. It has become a concern in the current bay area construction how to promote the coordinated development of finance under different rules in Guangdong, Hong Kong and Macao.

Recently, Ba Shusong, managing director and chief Chinese economist of the Hong Kong Stock Exchange, attended the first financial technology and innovation conference of Shenzhen Station, shared a speech on the theme “Financial development in Guangdong-Hong Kong-Macao Greater Bay Area: current status and trends” and put forward five suggestions for the coordinated development of financial institutions in Guangdong-Hong Kong-Macao Greater Bay Area, namely, to give full play to the cross-border business experience of Hong Kong-funded banks, to develop financial cooperation by taking advantage of Macao's Portuguese-speaking department, to promote the expansion of Hong Kong and Macao insurance industry in the mainland, to support financial technology innovation in Guangdong, Hong Kong and Macao and to develop a new path of green finance.

Ba Shusong, managing director and chief Chinese economist of the Hong Kong Stock Exchange

Double financial centers at home and abroad

The concept of Guangdong-Hong Kong-Macao Greater Bay Area is often compared with that of New York, San Francisco and Tokyo. Through comparison, Ba Shusong found that Guangdong-Hong Kong-Macao Greater Bay Area and the world's three big bay areas share common characteristics in terms of economic volume and industrial distribution, with the service industry in the world's three big bay areas accounting for more than 80 %, compared with 62.2 % in 2016.

Finance plays an important role in the development of the Gulf region around the world. Ba Shusong believes that “Finance +”promotes the construction of the world's first-class urban agglomeration in the bay area, that the world-class bay area interacts with the economic center and gives full play to the role of the financial center, and that the mode of “Finance + Port” logistics hub strengthens the competitiveness of the urban agglomeration.

In contrast to the three major Gulf regions in the world, Ba Shusong summarized the three characteristics of the development of financial markets in Guangdong, Hong Kong and Macao: first, the financial base is good; second, the strength of headquarters financial institutions needs to be strengthened; and third, the opening level of financial institutions is not balanced.

From the aspect of financial supervision, Ba Shusong believes that Guangdong-Hong Kong-Macao Greater Bay Area have the characteristics of “three sets of supervision systems and multiple supervision subjects". Compared with the double-layer multi-head supervision mode of U.S. financial supervision and Japan's unified and prudent supervision, Greater Bay Area combines the advantages with some features of the U.S. and Japan's supervision system, and is also actively exploring the difference and cooperation space of financial supervision in Greater Bay Area.

In the process of exploration, the economic and financial policies of Guangdong-Hong Kong-Macao Greater Bay Area are also constantly developing in harmony. Ba Shusong believes that the government cooperation mechanism has been continuously improved in the policy progress, the economic and financial integration policy has been comprehensively promoted, and the “9 + 2” Bay Area cities have developed in coordination with the differentiated division of labor.

Going deep into Guangdong-Hong Kong-Macao Greater Bay Area, Ba Shusong believes that the economic and financial development of Greater Bay Area presents a stair trend: Hong Kong, Shenzhen and Guangzhou are the three core hub cities, Dongguan, Foshan and Macao are the second tier, and the five cities in the third tier have less than 20 billion in financial volume. The 11 cities have complete industrial systems and distinctive division of labor, but at the same time, the regional development is not balanced and the per capita GDP gap is significant. Mutual complement and step-by-step development are opportunities for cooperative development.

According to Ba Shusong, financial integration has promoted the industrial differentiation and upgrading in Guangdong-Hong Kong-Macao Greater Bay Area, and the “9 + 2”bay city distribution has also brought about a more balanced supply and demand of financial services, and the financial industry in space is evolving from a single center in Hong Kong to a multi-core one in Hong Kong, Shenzhen and Guangzhou.

After a long period of accumulation, Guangdong-Hong Kong-Macao Greater Bay Area have distinguished between domestic and foreign markets belonging to the international system under the European and American financial system and the domestic system developed since the reform and opening up, and developed Hong Kong and Shenzhen financial centers. Ba Shusong believes that there is a strong demand for financial services and extensive cooperation space between financial centers, and Shenzhen and Guangzhou can become a link between domestic and foreign financial systems.

Suggestions on Coordinated Development of Financial Institutions

Financial institutions in Guangdong, Hong Kong and Macao grew up in different soil, showing their respective advantages and disadvantages. Ba Shusong observed the development of financial institutions in the three places from three dimensions.

First of all, from the perspective of Hong Kong and Macao financial institutions in Guangdong, Hong Kong-funded banks are the main financial institutions, Hong Kong-funded banks are specialized in serving cross-border finance and small and medium-sized enterprises, and Hong Kong-funded banks have become a useful supplement to the service field of small and medium-sized enterprises.

From the perspective of the development of Guangdong and Macao financial institutions in Hong Kong, Ba Shusong believes that Chinese banks are the challengers in the upward trend. Chinese banks are developing rapidly in Hong Kong regardless of asset size, profitability or development speed. Chinese securities dealers and Chinese insurance are the pursuers, while Chinese capital management is the market's complement.

From the perspective of financial institutions in Hong Kong and Guangdong in Macao, Chinese banks have become the main force in Macao's financial industry. Chinese insurance companies are leaders in both life insurance and non-life insurance, and Chinese enterprises have played a leading role in Macao.

Financial science and technology innovation has also become an important development direction in Guangdong-Hong Kong-Macao Greater Bay Area. Ba Shusong said that the financial science and technology in Greater Bay Area is generally in the leading position in the world and has great development potential. From the perspective of the development of financial science and technology ecology, the ecological system at the industry level is perfect and the strength needs to be improved. The regional distribution covers some subdivisions in Guangdong, while Hong Kong pays attention to block chains and virtual banks.

Overall, Ba Shusong believes that there are three opportunities in the collaborative development of financial institutions in Guangdong, Hong Kong and Macao: First, there is a strong demand for cross-border asset allocation in Greater Bay Area, and high net worth people increasingly recognize multi-regional, multi-currency and multi-form cross-border diversified asset allocation; Second, there is a strong demand for cross-border financing for enterprises, and the reform of Hong Kong's listing system has driven more and more enterprises from the Gulf region to list in Hong Kong. The third is to enhance the ability of Guangdong financial institutions to connect with the external market and improve product innovation.

According to Ba Shusong, there are two paths for the coordinated development of financial institutions in Guangdong-Hong Kong-Macao Greater Bay Area: to participate in integration through convenient systems such as QDII and interconnection channels such as Shenzhen-Hong Kong Link; Integration into the local financial market through the establishment of branches.

For the coordinated development of Guangdong-Hong Kong-Macao Greater Bay Area, Ba Shusong has given five suggestions: First, give full play to the cross-border business experience of Hong Kong-funded banks and promote the coordinated development of banking institutions in the three places; The second is to develop financial cooperation by taking advantage of Macao's Portuguese-speaking department to promote the coordinated development of Guangdong's financial structure. Thirdly, to promote the Hong Kong and Macao insurance industry to carry out medical insurance and property insurance business in the mainland. Fourth, the financial science and technology innovation potential of Guangdong, Hong Kong and Macao is huge, providing new ideas for the coordinated development of financial institutions in Guangdong, Hong Kong and Macao. Fifth, develop green finance to provide a new path for the coordinated development of financial institutions in Guangdong, Hong Kong and Macao.