. 6 billion, accounting for 58 % of total foreign investment in china. in 1995, 90 % of the syndicated loans to china were arranged in hong kong and 90 % of the chinese companies listed on overseas stock markets have their primary listing in hong kong. the volume of import and export trade between the two places amounted to us $ 44. 6 billion last year, accounting for 15. 9 % of china ’ s total external trade. if hong kong ’ s entrepot trade which came from china is also taken into account, the figure reached us $ 124. 1 billion, accounting for 34. 1 % of hong kong ’ s total external trade in that year. the number of mainland financial institutions in hong kong is on the rise and vice versa. these institutions are going to provide a whole range of financial services which are conducive to the continuous and stable development of the economic relationship between the two places. china will further open up its financial markets. this includes the opening up of more districts, the gradual relaxation of renminbi business and the gradual introduction of the investment banking mechanism. the hong kong financial sector will directly benefit from these moves since they will offer numerous business opportunities. in the course of stepping up our pace of financial reforms, we have to keep on learning from advanced international management experience and to provide training to outstanding personnel. we hope that the financial community in hong kong will provide us with assistance and support in these areas. before ending my speech, i would like to point out that the hong kong association of banks has contributed a lot in assisting the hkma to ensure the financial stability of hong kong. i hope all of you will continue to give your support to the hkma and play a more active role in promoting economic and financial developments in hong kong and its smooth transition. i would also like to announce that an association of mainland banks will be formed this year. i hope that the two banking associations will strengthen their exchanges and co - operation and work together for a more prosperous future. a delegation from the hong kong association of banks will visit beijing in a few days. i would like to welcome the delegation on behalf of the people ’ s bank of china. i will meet with some of you again on that occasion. we can further exchange views on the strengthening of co - operation between the banking sectors on the mainland and in hong kong.

a related argument, former federal reserve board governor jeremy stein gave an insightful speech in may 2014 addressing how diversity in market expectations could have contributed to the taper tantrum. 8 jeremy pointed out that it is unhelpful to view the “ market ” as a single individual, a theme that has been explored by hyun song shin of the bank for international settlements. 9 rather, the market is a collection of agents that can have widely divergent but perhaps strongly held beliefs at the individual level. jeremy attributes the taper tantrum to the existence of highly leveraged quantitative easing optimists - - in other words, individuals who expected the federal reserve to continue to accumulate assets much longer than the median expectation and who put little weight on see stein ( 2014 ). for a recent example, see shin ( 2017 ). shin suggests using caution when extrapolating “ market ” expectations from movements in asset prices, pointing to examples where technical factors likely complicate the interaction of market participants ’ actions relative to their expectations. - 5the median market expectation. once chairman bernanke affirmed the median expectation, these optimists had to quickly unwind their trades, with consequent sharp movements in asset prices. where does that leave us? the problem, to quote jeremy at length, “ is that in some circumstances there are very real limits to what even the most careful and deliberate communications strategy can do to temper market volatility. this is just the nature of the beast when dealing with speculative markets, and to suggest otherwise - - to suggest that, say, ‘ good communication ’ alone can engineer a completely smooth exit from a period of extraordinary policy accommodation - - is to create an unrealistic expectation. ” 10 jeremy was speaking about ending the accumulation of assets onto the fed ’ s balance sheet. as reported in the minutes for the march 2017 meeting, the fomc is now discussing a different inflection point, the phasing out of reinvestment and the shrinking of the balance sheet. 11 question : how concerned should we be about a repeat of the taper tantrum as we move through this new inflection point? we should start answering such a question by recognizing that there is always a chance of some market volatility. nonetheless, we need to take into account that the new york fed ’ s open market desk enhanced its information - gathering efforts after and, in part, as a response to the experience of the taper tantrum along two important