Hong Kong is a major international financial centre, comprising an integrated network of institutions and markets, which provide a wide range of products and services to local and international customers and investors. Hong Kong's financial markets are characterised by a high degree of liquidity and operate under effective and transparent regulations, which meet international standards. Hong Kong has a mature and active foreign exchange market due to an absence of exchange controls and a favourable time zone location. The Hong Kong dollar is freely convertible. There are no restrictions on capital movements into or out of the territory. Foreigners can repatriate their capital or funds out of Hong Kong and borrow Hong Kong dollars in the Hong Kong market. There are no restrictions to the trading or ownership of securities or property, or in the setting up or owning of companies by foreigners. In addition, the government has maintained a policy of low taxation.

On 1 July 1997, Hong Kong became the Special Administrative Region ("Hong Kong SAR") of the People's Republic of China (PRC). According to the Basic Law, which serves as its constitutional legislation, the Hong Kong SAR exercises a high degree of autonomy from the PRC and enjoys executive, legislative, and judicial power, including that of final adjudication of legal disputes. With China pushing forward with the modernisation of its own economy, the PRC expects Hong Kong to assist in this endeavour. It is widely recognised that Hong Kong is, and will continue to be, a significant gateway to China.

As at the end of July 2005, Hong Kong was the world's 10th largest trading economy; one of the world's 4 largest gold markets; the 14th largest banking centre, in terms of external transactions; the 9th largest stock market, in terms of market capitalisation; the 6th largest financial centre in terms of foreign exchange turnover; and, the 7th largest, if over-the-counter derivatives transactions are included.

Hong Kong's securities market has been increasingly internationalised. There has been a continued rise in the participation of international investors in the market. Many of the initial public offerings through the stock exchange are also made global. The majority of these issuers are supranational bodies, whose issues are almost invariably accompanied by global fund raising.

More and more world class asset and corporate planning schemes use Hong Kong entities as an intermediate Holding Company for investment holdings; and Trading Company for transfer pricing; or, for various other purposes. Hong Kong's tax system is simple and predictable. Only income and profits derived directly from Hong Kong are subject to tax. Consequently, if a Hong Kong company's trading or business activities are based outside Hong Kong, no tax is levied. Furthermore, there is no tax on capital gains, dividends, or interest; generous capital allowance and depreciation regulations; Hong Kong has no sales tax or Value Added Tax.