Carbon trade exchange could be trialed in Macau

Zhang Ping, deputy director general of China’s National Institution for Finance and Development, has suggested that Macau could trial a carbon emissions market, as the city studies the feasibility of establishing a securities exchange.
Zhang said that Macau needs to diversify the types of services it provides and that a stock exchange, if realized, could help to deepen financial cooperation between Macau and Guangdong.
But the mainland expert also suggested that a carbon exchange could be tested in Macau with unified valuation. Carbon exchanges permit the trading of carbon production credits, a market-based tool to limit greenhouse gases.
Macau is currently studying the possibility of establishing a stock exchange. The idea was first unveiled in the Outline Development Plan for the Greater Bay Area, wherein it was suggested that Macau utilize a securities market, most widely believed to take the form of a stock exchange, to better position the city as the bridge linking China and the Portuguese-speaking world.
Earlier this week, a Guangdong official said that a plan had been submitted to Beijing and would likely be approved before the Special Administrative Region’s 20th anniversary. In response, the Monetary Authority stressed that the concept was still being studied.
Yesterday, Secretary for Economy and Finance Lionel Leong said that the Macau government had not yet submitted any report to the central government on the issue of establishing a securities market.
Leong remarked that there was a lot of work for Macau to do before its own stock exchange could become a reality, including the development of a legal framework and service platforms. That being said, the sale and distribution of securities in Macau had evolved significantly in recent years, said Leong, as part of efforts to push forward the development of specialized financial services.
The deputy director general of China’s National Institution for Finance and Development made the comments on the sidelines of a symposium titled “Jointly Build the Bay Area and Create the Future”, held yesterday as part of the annual Macau International Trade and Investment Fair. The event attracted finance professionals and experts to discuss the mechanism through capital within the Greater Bay Area can seamlessly connect.
During the symposium, Zhang spoke broadly of his views on the integration of the Area in terms of services. He expressed his confidence in the success of the Greater Bay Area.
The mainland expert said that the enhancement of the service industry in mainland China and its connection to the infrastructure of the SAR is a key area in the development of Guangdong-Macau cooperation.
Such infrastructure, according to Zhang, includes financial services. It is not merely tangible and material structures, but more about the regulations and connection in payment system.
The Chief Executive of Hong Kong, the neighboring Special Administrative Region, Carrie Lam, during her policy address press conference on Wednesday, also commented on the speculated stock exchange. No matter where financial developments take place, be that Macau, Shanghai or Shenzhen, she said, Hong Kong sees it as an opportunity for cooperation.
Meanwhile, speaking on the sidelines of the symposium, Wen Wenxing, president of Guangdong Hengjian Holdings Ltd., organizer of the event, made a positive evaluation of the conceptual stock exchange in Macau.
“Macau has higher level of internationalization, with frequent international communications,” said Wen. “Utilizing Macau as a platform to boost financial transactions will both improve Macau’s global image and economic diversification.”
Stressing the Greater Bay Area’s economic potential, Wen foresaw the Macau stock market will be attractive to both mainland and foreign companies, with mainland ones prevailing. “Because when they need to expand to outside the country, they need a platform to facilitate the move,” Wen said.
Another financial professional attending the event, who requested not to be identified, explained that stability is the main attractiveness of Macau to global investors.
However, he noted that there are a lot of areas that need to be addressed before the market can be inaugurated.
“Macau is lacking the industry professionalism and knowledge,” he said, “including the requisite laws and regulations, the professional workforce and the market’s positioning.”
The finance professional said it was imperative that the Macau market find ways to differentiate itself from other neighboring markets.
Consultancy firms have been commissioned by the Macau government to study the feasibility of setting up the securities market. According to Secretary Leong, the studies will focus on Macau “serving the country’s development needs, while delivering on its inherent strengths,” in addition to taking into consideration the SAR’s specific needs.