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We are celebrating our 15th birthday today as a listed company with our market friends in Hong Kong and abroad, many of whom have made substantial contributions to HKEx's growth story over the last decade and a half. In that time we've grown from a local exchange into a truly global exchange group across multiple asset classes. While we've prospered tremendously over the last 15 years, milestones like this are good opportunities to take stock and look forward. We are getting set for a new journey that starts now.
More than 20 years ago the Stock Exchange of Hong Kong, the predecessor to HKEx, worked with its Mainland counterparts to launch the H-share regime. It provided a valuable mechanism for Mainland companies to internationalise, and for the Mainland itself to reform and open. Today, Hong Kong is China's number one offshore fundraising centre for Chinese companies, which has helped propel us into being one of the world's top exchanges and the largest exchange by market capitalisation of our own shares.
While it's nice to bask in the glow of past success, we mustn't linger there or we'll miss the opportunities in the present. We are in a time of great change; the world is evolving faster than ever before, China is opening quickly, and Hong Kong must keep pace. So what can we do? Our vision at HKEx is to reshape the global market landscape and connect China with the world. We want to build a robust and sustainable offshore RMB ecosystem, eventually developing Hong Kong into China's premier offshore wealth management centre. We want to bring the world to Hong Kong, and we want to give Chinese investors access to the world in Hong Kong.
This era will be marked by China shifting from a large net importer of capital to one of the world's largest exporters of capital. For years, foreign direct investment has poured into China's manufacturing sectors, making China into the "factory of the world". International capital has also flown into Mainland companies that have raised funds, transforming Chinese listed companies into some of the largest banks, insurance, telecom, energy and consumer companies in the world by market capitalisation. The next era, however, will be marked by fund outflows of historic proportions,driven by China's needs to deploy and diversify its national wealth to the global markets, and this is Hong Kong's next big opportunity.
There is some US$20 trillion locked up in bank accounts in the Mainland earning little return, and even more in real estate and other physical assets which have become increasingly risky. As China implements its interest rate, currency exchange and credit market reforms, that money will begin to be re-allocated to other assets, migrating from the property market and bank accounts to a variety of financial assets such as stocks, bonds, and so forth, many of them in international markets. As the Mainland economy continues to grow, this trend will accelerate further in the coming 10 to 20 years.
The RMB is also internationalising faster than many people expected, with the International Monetary Fund expected to add the RMB to its Special Drawing Rights currency basket soon. The A-share market opening via Shanghai-Hong Kong Stock Connect and the upcoming Shenzhen Connect has made it only a matter of time before A-shares are included in many global emerging markets indices, which will mean foreign investors taking much greater exposure to Mainland equities.
For us to prosper in this new landscape, we need to provide China investment opportunities for international investors and international investment opportunities for Chinese investors. We want international liquidity and Chinese liquidity to come together in Hong Kong with a variety of Chinese and international investment and hedging products on offer. In the past, we were serving two customers: the financing needs of Chinese enterprises and foreign investors looking for exposure for Chinese equity. In the future, we must serve four customers, and serve them all well: Chinese issuers, foreign investors, Chinese investors, and overseas issuers. And the definition of issuers and investors is expanding to include all kinds of financial products issuers, users, risk managers and investors.
What makes us think we can achieve it? The key is our political system: the "One Country, Two Systems" framework that is buttressed by internationally-respected legal and regulatory standards. This system gives Hong Kong a unique edge to experiment with innovative structures such as Shanghai Hong Kong Stock Connect, where international and Chinese investors are able to trade the other's product electronically with a unified price discovery mechanism, but anchored on local clearing and settlement, and overseen by joint regulation and enforcement regimes. Under such a regime, investors on both sides are able to trade in the other market, but without having to move funds across the border and without having to change their market structures and investment behaviours. The strength of this model depends on robust regulatory, legal, and enforcement cooperation on both sides of the border, something that has been established with Shanghai-Hong Kong Stock Connect.
This model will develop Hong Kong into an offshore RMB ecosystem that provides a variety of investment products for international and Mainland investors. If the ecosystem is liquid enough and convenient enough, more foreign investors will use RMB to invest. As the currency's internationalisation continues its march forward, the Hong Kong RMB ecosystem will continue to grow in a virtuous cycle. If we are able to have Chinese and investors to "meet" in this offshore ecosystem and if we are able to have each other's products to be available to each other in this offshore ecosystem, we will hopefully transform Hong Kong's traditional role as a pure gateway to a truly global leader of wealth management anchored on China’s liquidity, the last closed capital base that is still yet to be globally available and deployed.
Shanghai-Hong Kong Stock Connect was a good first step, and now we're about to take the second step with Shenzhen-Hong Kong Stock Connect later this year. These are, however, just the start, and we still have a long way to go. We need to work together with regulators, market participants and Mainland exchanges to expand the ecosystem as we build Hong Kong into China’s premier wealth management centre. It is this path that will ensure Hong Kong’s prosperity for the next 15 years and beyond.
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