HONG KONG: The city's market regulatory system may need to undergo some changes in the future to meet new market conditions that will emerge after the current global crisis, said Securities and Futures Commission Chief Executive Officer Martin Wheatley.

Changes in regulatory systems always follow financial crises, he said.

The adjustment cycle this time will likely extend over a longer period of time due to the severity of the current crisis, he added.

The SFC will work closely with all parties concerned to map out the regulatory changes for the benefit of the Hong Kong market, Wheatley told a press conference held Friday to celebrate the regulator's 20th anniversary.

"We will continue to work, as we have done, very professionally and very closely with the community to make sure the changes will be of benefit to the Hong Kong market," he said without elaborating.

But he assured the market that "any changes to our current regulatory structure must be given careful and balanced consideration".

"It has always been our approach to ensure that both the industry and public are fully consulted," he added.

Responding to questions about the local stock market's recent strong showing, Wheatley described the surge in share prices as a "technically-driven rally", due partly to ample liquidity created by fiscal stimulus and monetary easing measures by governments around the world.

Replying to questions on the recent court decision that blocked PCCW Ltd Chairman Richard Li's HK$15.9 billion buyout offer for the city's dominant telecommunication firm, Wheatley said he hopes the verdict will effectively stop bidders from using vote manipulation in future privatization bids.

He emphasized that the court decision will not discourage "legitimate" privatization moves, he said.

Last month, the Court of Appeal ruled that a PCCW shareholder vote that approved the privatization offer was manipulated. The verdict came after the SFC raised a legal challenge against a lower court decision that favored the deal.

Meanwhile, Nobel Laureate Paul Krugman said in the same press conference that he believes the worst for the global economy has passed.

"I think we probably have passed the worst stage...the patient is out of the emergency room now but he is still very sick," he jokingly said.

On questions about the role of renminbi in the future, Krugman said he believes the yuan is unlikely to replace the US dollar as a major currency in "my lifetime" as it is yet to be freely convertible.

He also downplayed the likelihood that the USA's "AAA" sovereign credit rating could be downgraded.

(HK Edition 05/23/2009 page5)