People’s Republic of China–Hong Kong Special Administrative Region: Financial Sector Assessment Program-Technical Note-Insurance Sector Regulation and Supervision
People’s Republic of China–Hong Kong Special Administrative Region: Financial Sector Assessment Program-Technical Note-Insurance Sector Regulation and Supervision

Author: International Monetary

Publisher: International Monetary Fund

Published: 2021-06-15

Total Pages: 63

ISBN-13: 1513585118

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This note provides an update and assessment of developments in insurance supervision since 2014. It is part of the 2020 Financial Sector Assessment Program (FSAP) for the Hong Kong SAR (HKSAR) and draws on discussions there from September 10 to 24, 2019. It has not been updated for the impact of recent global events associated with the COVID-19 pandemic. The insurance sector is large, especially long-term (life) insurance, highly international and has been growing steadily. The long-term market is amongst the world’s largest, particularly by penetration (premiums to GDP). Growth has been supported by the popularity of savings products, including sales of policies to Mainland Chinese visitors (MCVs), although these have declined from their peak. The general insurance sector, though comprising many more companies, is relatively small and spread over many lines. The authorities have identified scope for growth in protection policies as well as opportunities for captive and specialty lines related to China’s Belt and Road Initiative. Tax incentives have supported the recent successful introduction of new annuity and health insurance products. Although foreign-owned companies account for a large share of business, the HKSAR is the home of three major domestic groups operating internationally.

People’s Republic of China–Hong Kong Special Administrative Region: Financial Sector Assessment Program-Technical Note-Regulation and Supervision of Secondary Markets
People’s Republic of China–Hong Kong Special Administrative Region: Financial Sector Assessment Program-Technical Note-Regulation and Supervision of Secondary Markets

Author: International Monetary

Publisher: International Monetary Fund

Published: 2021-06-15

Total Pages: 37

ISBN-13: 1513573268

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Hong Kong SAR has, over the recent years, become an equity trading hub catering to domestic and foreign investors, including increasingly to investors from Mainland China. Most trading is conducted on markets operated by recognized exchange companies, with limited domestic trading happening via automated trading services (ATS) providers in the form of alternative liquidity pools. The introduction of Stock Connect in 2014 enabled investors from Hong Kong (including domestic and foreign) to directly invest in the Shanghai and later Shenzhen markets and investors from the Mainland to directly access the Hong Kong market. Trading via Stock Connect has seen a steady rise over the last few years, increasing the linkages between Hong Kong SAR and the Mainland. Mainland companies currently account for over 60 per cent of market capitalization of the equities traded on the Stock Exchange of Hong Kong (SEHK).

People’s Republic of China–Hong Kong Special Administrative Region
People’s Republic of China–Hong Kong Special Administrative Region

Author: International Monetary Fund. Monetary and Capital Markets Department

Publisher: International Monetary Fund

Published: 2014-07-17

Total Pages: 107

ISBN-13: 1498399797

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This Insurance Core Principles Detailed Assessment Report was prepared in the context of the Financial Sector Assessment Program for the People’s Republic of China–Hong Kong Special Administrative Region (HKSAR). The report describes that the insurance penetration and density in HKSAR is among the top 10 in the world. Foreign-owned insurers are dominant in the HKSAR insurance sector, and account for about 72 percent of total assets as at end-2012. The long-term insurance industry is highly concentrated, while the market share of general insurance industry is more evenly distributed. All except one of the top-10 insurance groups are all foreign owned, with much larger consolidated operations compared to their operations in HKSAR. The Insurance Authority is responsible for regulating and supervising the insurance industry of the HKSAR. It is supported by the Office of the Commissioner of Insurance, a government department in the HKSAR. A self-regulatory system is used to supervise the conduct of business of intermediaries.

People’s Republic of China–Hong Kong Special Administrative Region: Financial Sector Assessment Program-Technical Note-Implications of Fintech for the Regulation and Supervision of the Financial Sector
People’s Republic of China–Hong Kong Special Administrative Region: Financial Sector Assessment Program-Technical Note-Implications of Fintech for the Regulation and Supervision of the Financial Sector

Author: International Monetary

Publisher: International Monetary Fund

Published: 2021-06-15

Total Pages: 57

ISBN-13: 1513573276

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he Hong Kong Special Administrative Region (HKSAR) is among the world’s major fintech hubs, well positioned to develop fintech initiatives from its traditional strengths in financial services. Key factors enabling the HKSAR to emerge as a fintech hub include its presence as an international financial center, its free-flowing talent and capital, a highly developed information and technology communication (ITC) infrastructure, and its most unique trait, a geographical and strategic advantage by proximity to the market in Mainland China.

People’s Republic of China–Hong Kong Special Administrative Region: Financial Sector Assessment Program-Technical Note-Investment Funds Sector Liquidity Stress Testing
People’s Republic of China–Hong Kong Special Administrative Region: Financial Sector Assessment Program-Technical Note-Investment Funds Sector Liquidity Stress Testing

Author: International Monetary

Publisher: International Monetary Fund

Published: 2021-06-15

Total Pages: 29

ISBN-13: 1513584332

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The Hong Kong Special Administrative Regime (HKSAR) is home to a fast-growing and highly international investment fund industry. The public investment fund industry authorized in HKSAR has grown rapidly from US$628 billion in 2008 to US$1.6 trillion in net asset value (NAV) in 2020. The locally domiciled sector grew from US$121 billion in early 2015 to almost US$155 billion in 2020. Open-end funds authorized for sale in HKSAR are substantially invested in foreign assets and significantly invested in by non-HKSAR residents and are therefore reactive to international liquidity and price conditions. Locally domiciled funds invest their portfolios in both local and overseas assets markets, while they are overwhelmingly funded by HKSAR investors.

People’s Republic of China–Hong Kong Special Administrative Region
People’s Republic of China–Hong Kong Special Administrative Region

Author: International Monetary Fund. Monetary and Capital Markets Department

Publisher: INTERNATIONAL MONETARY FUND

Published: 2014-07-16

Total Pages: 0

ISBN-13: 9781498391436

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This Financial Sector Assessment Program report on People’s Republic of China–Hong Kong Special Administrative Region highlights that it has developed a sound framework for the regulation of securities markets, which exhibits a high level of implementation of the International Organization of Securities Commissions Principles. Both the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) are sophisticated regulators and have been able to leverage from domestic and international expertise to develop sound supervisory practices. Further, while traumatic, the Lehman minibond experience has led to material improvements in conduct supervision that have permeated both the SFC and the HKMA. Continuing efforts by the SFC to build up its capacity to identify and monitor emerging risks should increase the SFC’s ability to react in a timely manner to an evolving landscape, marked by an increased interconnection with the Mainland China, an active presence by international players and increased regional competition as an international finance center. It is important to consider translating the operational independence that the regulators have enjoyed into de-jure independence, through modifications in the current legal governance arrangements for both SFC and HKMA.

People’s Republic of China–Hong Kong Special Administrative Region: Financial Sector Assessment Program-Technical Note-Banking Sector: Supervision and Regulation
People’s Republic of China–Hong Kong Special Administrative Region: Financial Sector Assessment Program-Technical Note-Banking Sector: Supervision and Regulation

Author: International Monetary

Publisher: International Monetary Fund

Published: 2021-06-15

Total Pages: 48

ISBN-13: 1513573314

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Banking supervision and regulation by the Hong Kong Monetary Authority (HKMA) remain strong. This assessment confirms the 2014 Basel Core Principles assessment that the HKMA achieves a high level of compliance with the BCPs. The Basel III framework (and related guidance) and domestic and cross-border cooperation arrangements are firmly in place. The HKMA actively contributes to the development and implementation of relevant international standards. Updating their risk based supervisory approach helped the HKMA optimize supervisory resources. The HKMA’s highly experienced supervisory staff is a key driver to achieving one of the most sophisticated levels of supervision and regulation observed in Asia and beyond.