HK an 'ideal link' between Belt, Road and GBA

Hong Kong, with its unique advantages, is well positioned to be a "super-connector" between the Belt and Road Initiative and the Guangdong-Hong Kong-Macao Greater Bay Area in capital raising and financing infrastructure projects, bankers said on Thursday.

"Hong Kong, as a special administrative region equipped with many unique advantages in terms of institutions, financial markets, talents, business environment and geographical location, could and should play a proactive role in connecting and participating in the regional development," said Sun Yu, vice-chairman and chief executive of Bank of China (Hong Kong), during the sixth Belt and Road Summit held on Thursday in Hong Kong.

"The GBA has definitely become an important supporting region for the Belt and Road Initiative", Sun said.

Hong Kong is a "super-connector" between the BRI and the GBA, said Matthew Hung, managing director and head of corporate coverage at HSBC Hong Kong. "Hong Kong has a unique advantage of knowing the Chinese mainland as well as knowing overseas."

While endowed with various advantages, Hong Kong may still lack experience and channels in capital raising for infrastructure projects due to the risks involved, financial analysts said.

Speaking on financing difficulties of smaller companies in getting financing for BRI projects, Jack So Chak Kwong, chairman of Airport Authority Hong Kong, said, "The most important thing is to find more sources for funding, and perhaps in Hong Kong we can have a special segment of the market dedicated to the Belt and Road financing."

Echoing So's remarks, Sun added that the pressing challenge in financing infrastructure projects is risk allocation. "We also need to manage the risks, and create an ecosystem to provide financial services to change these non-bankable projects into bankable ones, which includes not only commercial banks, but also policy banks, insurance companies, legal firms, auditing and consulting firms," he said.

"Infrastructure projects will go wrong if you allocate the risks to the wrong party," warned Peter Burnett, managing director at Standard Chartered Bank (Hong Kong). "With the advantages we enjoy in Hong Kong, it's easier for us to find out where the risks are and allocate them to the right parties."

Securitization of the infrastructure lending－banks bundling various lending together, securitizing them and selling them to the market－could also bring in more capital and encourage companies to tap into the market, Burnett added.

A separate listing requirements framework is also suggested to be set up to accommodate funding demand from the infrastructure project companies by launching a special listing board, said Rebecca Chan, leader of national capital market group, partner at auditing firm Deloitte China.