Econ 310 Section 4

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Econ 310 Section 4 Financial Institutions in Hong
Kong
Group Members
Cheng Wai Lun, Alan (033163)
Tsang Sze Man, Judy (033182)
Lee Lai Fong, Nesta (033185)
Tang Wing Yi, Winnie (033198)
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Topic The prospect of Debt Market in Hong Kong
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What is Debt Market?

• (I) Debt markets are often referred to
  generically as the bond market.
• (II) A bond is a security that is a claim on the
  earnings and assets of a corporation.
• (I) is true, (II) false.
• (I) is false, (II) true.
• Both are true.
• Both are false.

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• Before 1990s
• Hong Kong Government only emphasize the
  development of Bank and Equities Market

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• Until 1997 Asian Financial Crisis
• Hong Kong Government want Hong Kong to become
  a Debt Market Center

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Does Hong Kong has potential to become such
Asian debt market centre?

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• We would like to talk about this by
• The opportunities of developing debt market in
  H.K
• The threat of development
• Ways to facilitate the debt market

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Debt market

• loans to an entity
• ? promises to repay the bondholders or
  note-holders the total amount borrowed
• Not owners of an entity, but its creditors
• Attention
• ? debt prices fluctuate in response to the
  forces of supply and demand
• ? influenced by other factors

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Debt market
(Source Hong Kong Monetary Authority)
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Debt market
(Source Hong Kong Monetary Authority)
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Debt market
(Source Hong Kong Monetary Authority)
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Debt market
(Source Hong Kong Monetary Authority)
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Opportunity

• Political and Economic environment
• Encourage public corporations
• Executive forcibly on MPF scheme
• Mindset on the investment in Chinese

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Threats
Interest Rate
(Source Hong Kong Monetary Authority)
Interest Rate
Attraction
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Threats
(Source Hong Kong Monetary Authority)
Large fluctuation
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Threats

• Investment culture
• gtgtshort-term and high return investment
• Neglected the principle of diversification of
  risk

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Which factor is not the threat of developing Debt
Market?

• A) Investment Culture
• B) Executive forcibly on MPF Scheme
• C) Neglected the principle of diversification
  
• of risk
• D) Increase of the interest rate

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Facilitate the Debt Market

• Hong Kong Government
• provide a favourable external factors
• ?stable financial market
• ?sound legal system

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Facilitate the Debt Market

• Asian governments
• ? have a high saving rate of about 30 percent

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Facilitate the Debt Market

• Mutual Debt Market
• ? additional and stable investment channel for
  investors

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Need to Focus on

• Education
• ? people recognize with debt market
• Private sector or corporate
• ?willing to issue bonds in order to satisfy
  the demand in market
• ?beneficial to raise more money for the better
  development to corporate.

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Which is/are the favorable external factor(s)?

• A) Stable financial market
• B) Sound legal system
• C) Both of them
• D) None of the above

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The End