the compelling evidence of the preceding one - and - a - half decades of the same fixed exchange rate system, was that hong kong has a highly flexible internal cost - price structure, which can quite quickly deliver the same external relative price adjustment as a currency devaluation. although the time profile of the adjustment process is different, as is the degree of short - term pain involved, internal adjustment arguably leaves the economy leaner and fitter than it would if everyone could simply depend on depreciation to see them right. the second flawed perception was that the intervention by the authorities in the stock market in august 1998 represented a fundamental reversal of traditional non - interventionist policy. the mistake here was to fall into the trap of characterising hong kong as a place where the authorities never intervened. we have always made clear our preparedness to intervene for such purposes as promoting efficiency in the market economy, providing infrastructure, or providing necessary support for the most needy in society. but our emphasis has always been to keep intervention to the minimum. this may sound uncontroversial today ; indeed, it is probably an attitude shared by most governments, including those here in europe. but you should remember that when hong kong was first vigorously espousing this doctrine, perhaps 30 or 40 years ago, the vogue in most western countries was for the state to assume an expanding role in the economy. in keeping with hong kong ’ s principles, the stock market intervention in 1998 was specifically directed towards improving the operation of the market economy rather than perverting it : it was designed to frustrate market manipulation that would otherwise have led to serious market dislocation. a third example of perceptions being at variance with reality was the prediction that the mainland chinese currency, the renminbi, would be devalued during 1999 and that the hong kong dollar would inevitably be swept down with it. it is true that the economic performance of the mainland was for a time moving in a manner such that devaluation could have been judged a not unreasonable option. but those who predicted such an event tended to give insufficient attention to the fact that the renminbi is not a convertible currency, that the prevailing external position was strong, and that the authorities had made it clear that they were not contemplating devaluation. the read - across to the hong kong dollar required an even greater leap of the imagination. our exchange rate had never been dislodged from its peg by previous depreciations of the mainland ’

gdp, but it is still growing at a rapid pace with a strong pipeline of ipos of companies from the mainland and elsewhere. 7. in the bond space, there is a fairly common misconception that we do not have a bond market to speak of. yes, it is true that corporate hk dollar bond market is small, thanks to the success of the linked exchange rate system which enables our corporations to tap into the much deeper investor pool of us dollar bond markets without much currency risk or hedging costs. but as revealed in a recent report by the international capital markets association ( icma ), hong kong is actually the largest centre for arranging asian international bond issuance, capturing 34 % ( or us $ 196 billion ) of asian international bonds in 2020, followed by the us ( 18 % ), the uk ( 17 % ) and singapore ( 5 % ). 8. hong kong is also well ahead of other major international financial centres in terms of arranging first - time bond issuance, capturing 75 % ( us $ 18 billion ) of the asian market versus singapore ( 9 % ) and the uk ( 5 % ). issuers and investors alike are well served by our comprehensive financial ecosystem underpinned by free flow of capital, an internationallyaligned common law system and regulatory environment, and the presence of world - class professional services with talents from all over the world. 1 / 4 bis central bankers'speeches 9. all these mean that hong kong is well placed to serve as a centre for asian structured financing just like other financial intermediation that we are doing, as this market continues to mature in this part of the world. 10. the macro trends are also supportive. with the record low interest rates and abundant liquidity in many advanced economies, investors are keen to look for some decent yields for their investments. asia including china is clearly a key focus area. take the bond connect as an example, in 2020 the scheme recorded an average daily turnover of nearly rmb30 billion, representing a growth of 82 % over 2019. this accounts for 52 % of foreign investors ’ total turnover in the cibm market, and shows that hong kong continues to be the preferred channel for investing in the mainland market. the next exciting thing will be the launch of the southbound bond connect, which will open up a ground - breaking conduit for mainland investors to access the international bond market via hong kong. all these will be important impetus for the further development of fixed income including structured credit