160
Table 4.28: Hong Kong’s Financial Position in Selected Areas
Worldwide Ranking Ranking in Asia
International financial centre* 3 1
Stock market** 7 3
Bond market*** n/a 7
* Source: Global Financial Centres Index (2017)
** Based on market capitalization as at end-June 2017
*** Source: Asian Bonds Online, RAM
4.6.2 DEVELOPMENT OF THE SUKUK MARKET IN HONG KONG
Hong Kong had the foresight to identify the booming potential that Islamic finance had in the
mid-2000s. It had then sought to leverage its strengths as an IFC and world-class asset-
management centre, to promote the development of the ICM. As Hong Kong has a relatively
small Islamic community (only 0.1% of its total population, according to PEW Research Forum
2009), its strategy of venturing into wholesale Islamic financial activities was entirely
deliberate. This was in line with its strategy of expanding its overall capital markets. On the
one hand, as an IFC it wishes to consolidate its status by diversifying its financial products and
services. On the other, as a forerunner in international finance that possesses key strengths in
financial intermediation, it aims to bring together investors and fund raisers from China, the
Middle East and other parts of the world through its sukuk platform, to match their
fundraising and investment needs. Leveraging its connection with Mainland China, Hong Kong
plays the role of a capital-raising centre to assist Chinese issuers to access the international
markets and expand their Islamic investor bases. Concurrently, it aims to provide
opportunities to Islamic investors from the Middle East and other regions to partake in the
rapid economic growth of Mainland China and other Asian countries. As an IFC, it acts as a
financial intermediary in the conventional market. With its endeavours to develop Islamic
finance, Hong Kong will hone its competitive edge to serve the Islamic finance market.
Table 4.29 provides a brief outline of the efforts made by the Hong Kong government in
developing its ICM, particularly the sukuk market.
Table 4.29: Timeline of the Development of Hong Kong’s ICM/Sukuk Market
Year Timeline description
2007
 The Chief Executive of the Hong Kong Special Administrative Region identified the vast
potential of Islamic finance in his 2007-2008 Policy Address and highlighted the government’s
aim of leveraging this new trend of Islamic finance development to establish an Islamic
financial platform in Hong Kong. This was to further consolidate Hong Kong’s position as a
global financial centre. In particular, the following initiatives were noted:
 Promote Hong Kong’s financial services to major Islamic countries and regions.
 Develop an Islamic bond market.
 To accomplish these goals, the Hong Kong Monetary Authority (HKMA) set up a dedicated
team in collaboration with the financial sector, to study the relevant issues and make
recommendations on the introduction of Islamic debt offerings in Hong Kong (The 2007-2008
Policy Address).
2008
 Memorandum of Understanding (MOU) signed between the HKMA and the Dubai International
Financial Centre Authority (DIFC Authority) on 20 May 2008, to foster co-operation in the
development of Shariah-compliant financial products and the financial infrastructures in their
respective jurisdictions (Press Release, HKMA, DIFC Authority, 2008).