Can Macau Replace Hong Kong as the World's Premier Financial Hub? By Chapman Chen, HKBNews
Updated: Dec 17, 2019
According to Reuters, Xi Jinping intends to turn Macau into an international financial center, yuan-denominated stock exchange & RMB settlement center, presumably to replace Hong Kong, which has revolted against China tyranny. Yet, the reason why foreign investors use HK as the springboard for entering China is because Hong Kong's legal system is trustworthy, its has financial talents and its enterprises possess international credit. Fitch Ratings has just revised the rating outlook on Macau from "Stable" to "Negative" due to its closer connections w/ Red China. In the last 10 months, HK accounted for 72% of the actually utilized FDI in China while Macau only accounted for 1.3%. For the last 6 years, HK's annual share of China's ODI has been 60% while Macau is not even among the top 20. And Iran may be the only country that accepts RMB instead of USD on its official currency rate reporting platform. On what can Macau, which lacks both hardware and software, rely to replace HK as the international financial center in Asia?
Which country would accept RMB in place of USD?
According to Reuters, Chairman Xi Jinping will visit Macau next week to announce a series of new policies aimed at turning the city's casino-based economy into an international financial center, presumably to replace Hong Kong, which has vigorously stood up to China oppression since June. The policies include the setting up of a yuan-denominated stock exchange and the acceleration of a renminbi settlement center already in the works. However, Iran is the only country in the world that has removed the US Dollar from its official currency rate reporting platform and replaced it with China's yuan.
The Biggest Foreign Investing Entity in China
According to the Ministry of Commerce of China, in the first ten months of 2019, the actually utilized foreign direct investment (FDI) in China was US110.8 billion, of which Hong Kong accounted for 72% (USD 79.7 billion), USA 2.3% (USD 2.7 billion) and Macau 1.3% (USD 1.5 billion). From June, the beginning of the HK Time Revolution, through the end of October, HK's direct investment in China was USD 41.8 billion, up 10% over the first 5 months.
In 2017, China's ODI (Outbound Direct Investment) was USD 15.83 billion, of which 58% or USD 91.1 billion was invested in HK or in other regions via HK, while Macau was not even among the top 20. In the first 5 months of this year, China's ODI in HK was USD 44.5 billion, while in the 5 months ensuing the outbreak of the HK Time Revolution, the investment rose to USD 46 billion.
The current number of persons engaged in financing and insurance in HK is 237,000, accounting for 8.3% of the working population. Whereas the current number of persons engaged in financing in Macau is 12,700, accounting for 3.3% of the working population, and less than 50,000 people are engaged in financing, real property, commerce and industry combined.
Fitch Ratings Downgrades Macau
On Dec 16, Fitch Ratings revised the rating outlook on Macau from "Stable" to "Negative" due to its closer connections with mainland China. In fact, ALL financial reserve of Macau is already handed over to Guangdong Province for investment, which means that it is ever more difficult to raise funds in Macau and the interests to be paid will be ever higher!