Henry Chan advocates for the Mandatory Provident Fund to support the development of local registered ETFs.

Former Financial Secretary and Treasury Secretary John Tsang said at the New City Finance TV Economic Summit that, in addition to continuing to support mainland Chinese companies to “go global” and list in Hong Kong, efforts should also be made to attract international companies to list in Hong Kong. However, while easy to say, difficult to do. The biggest challenge is liquidity. If an international company lists in Hong Kong without sufficient funds to support trading volume, its stock price can easily fluctuate, which is not good for both the company and investors.

He pointed out that the current connectivity mechanism allows some foreign companies listed in Hong Kong to enter southbound trading if they are included in the Hang Seng Composite Index, enabling mainland investors to buy and sell. But the problem is, inclusion in the index takes time and is uncertain. For an international company preparing to go public, this uncertainty is hard to accept. So he has been thinking about whether it can be more flexible. For example, creating a special green channel for some strategically important international companies, allowing them to access mainland funds immediately upon listing.

Regarding the Financial Services and the Treasury Bureau’s suggestion to establish a credible, phased “Shanghai-Hong Kong Connect” and “Shenzhen-Hong Kong Connect” mechanism, Tsang fully agrees, as it can both incentivize high-quality international listings and protect investors’ rights. He also said that allowing mainland investors to invest in international companies has another benefit: it can enhance Hong Kong’s voice in international asset pricing. When mainland funds participate in the pricing of international companies, they are no longer passive price takers but active price setters.

Tsang pointed out that MPF (Mandatory Provident Fund) is Hong Kong people’s “retirement money,” now exceeding HKD 1.6 trillion. Currently, most of this money is invested in traditional fund products with relatively high management fees and limited investment options. If MPF can invest more in Hong Kong-based ETFs, members will have more choices and lower costs. For the ETF market, more funds mean better liquidity. For the entire Hong Kong market, more institutional investors will make the market more stable.

He suggested giving MPF a new mission: supporting the development of locally registered ETFs in Hong Kong. This is a win-win situation. Strengthening Hong Kong’s ETF market can also help realize the true value of ETF connectivity. When Hong Kong’s ETF market has sufficient depth and breadth, mainland investors will find it more convenient to invest in international markets through Hong Kong.