Liang Fengyi: Tokenization allows traditional financial products to be issued on the blockchain at almost atomic speed.

On November 19, the executive director of the Hong Kong Securities and Futures Commission, Leung Fung Yee, spoke at the "Dialogue with International Investors" seminar about the forces of change in the investment market. Firstly, she mentioned that innovative technology is leading the financial industry towards an unlimited blue ocean of potential. With the advancement of program trading, machine learning, and artificial intelligence language models, various front-line, mid-office, and back-office departments are undergoing transformation, including sales, research, client communication, and compliance functions. She also highlighted the emergence of a new wave of tokenization, where traditional financial products can be issued, transferred, owned, and recorded almost instantly on the blockchain. Secondly, passive funds continue to maintain an advantage over active funds. In the past nine years, more funds have flowed into passive funds compared to active funds. This year, the total assets of passive mutual funds and exchange-traded funds in the United States surpassed active funds for the first time. This trend raises concerns about potential risks due to investment concentration in corporate giants. These giants have seen their market value soar as investors flock to them, leading to an increase in their weight in market indices, creating a positive feedback loop. When the investment frenzy subsides, it may cause significant market volatility. Thirdly, amid stricter regulations in the banking sector, the private capital markets have seen rapid growth. Global assets under management in private capital have surpassed $14 trillion, tripling from a decade ago. The growth rate of this business is fastest in the United States, followed by Europe, while Asia's growth rate is slower, indicating greater growth potential. Leung Fung Yee emphasized that private credit as another financing option for corporations and longer-term investment projects is worth supporting, but with sufficient transparency, liquidity risk management, and more comprehensive data reporting. Leung Fung Yee pointed out that besides the aforementioned issues, topics such as climate change and sustainable finance are also worth exploring. However, she stressed that we are in an unpredictable era. With the influence of innovative technology, program trading, and index investing, the market today is more diversified and larger amounts of capital can flow more rapidly between different asset classes and regions. Given the complex geopolitical situation and the era of "Trump 2.0," disruptions in the supply chain, trade disputes, and military conflicts in recent years are not as uncommon as they may seem. The only certainty is that uncertainty and market turmoil have become the new normal.