Overview
The 2008 financial crisis both shock and woke the world in different dimensions. The most shocked within the world, however, were areas where investment in financial instruments and assets is at its highest including Hong Kong (Azis & Shin, 2015) . By definition, shocked, as used above means that the industry was taken by surprise that companies considered impregnable and too large to fail can actually fail. Further, investments worth billions of dollars on paper could actually be worthless in the real sense. The shock, created the waking up which can be defined as seeking to understand what the industry players did wrong, then seeking to ensure that it never happens again. In Hong Kong, an active and passive set of best practice rules has been set up to ensure that the kind of losses in money and investor confidence that took place immediately after 2008 will not happen again.
Background
Among the leading global centers for asset based investment is Hong Kong. Indeed, approximately half of all asset investment in Hong Kong is foreign. This means that residents of Hong Kong carry out a lot of asset investment (Fong, 2013) . At the same time, many foreign nationals, more so from the greater Asian region prefer to have their investments made in Hong Kong. It is, therefore, no wonder that investment authorities in Hong Kong, including the Securities and Futures Commission (SFC), Financial Stability Board of Hong Kong and the Monetary Authority (Hong Kong), have sought to streamline the industry to safeguard investors (Fong, 2013) . Industry players themselves have also come together in an attempt to better their performance to avoid a repeat of what happened in 2008.
Delegate your assignment to our experts and they will do the rest.
Best Practice Rules
One of the principle best practice rules engendered in Hong Kong today is investor education and enlightenment. Asset managers are to ensure that investors develop an understanding, albeit simple, about the intricacies of the investment market. This includes having an understanding of investment products available, the risks involved, as well as the rights and obligations of the investor within the relationship (Azis & Shin, 2015) . It is the work of asset managers to advice but investment decisions ought to be made by the investors themselves. An enlightened investor is in a position to better digest the information given by the asset manager and make the right decision. Further, even if the decision may not have been right, the investor may be able to understand what went wrong, a fact that can help stem the loss of investor confidence in the case of a market downturn.
Regular and consistent communication between investors and their asset managers is another important best rule practice. This rule is mainly premised on the fact that lack of communication between investors and their asset managers was among the issues that caused the infamous 2008 financial crisis. Without the need to keep constant touch with the owners of the monies being invested, it was easier for the asset managers to grow reckless or for the investment portfolios to seemingly develop a life of their own (Fong, 2013) . The combination of an enlightened investor and constant communication means an element of transparency is introduced into the relationship. The asset manager consistently understands the intent of the inventor while the investor understands what the asset manager is doing with the investment.
Another important best practice rule entails always using a locally accredited and licensed credit rating agencies. Credit rating is an important aspect in facilitating investment in a secondary market. During the run down to 2008, credit ratings were very poorly done with the same asset having a multiple level investment. To avoid this, not only are organizations supposed to seek for credit rating but also do so through credit rating experts who have been vetted and licensed by the SFC (Azis & Shin, 2015) . This will avoid the taking up of financing instruments that are incapable of being satisfied by the investments for which they are being taken, thus leading to loss of investment through foreclosure.
With the investment portfolio in Hong Kong being so vast and the investor base so wide, investing in the global asset market is unavoidable. However, best practice demands a proper due diligence to be carried out on any and all international investment portfolios. Among the means to achieve this end is through liaison with experts in different places of the world who share ideas and ratings of different potential investments. One of the flourishing liaisons is with asset managers within the European Union, an investment market that works closely with the Hong Kong market (Azis & Shin, 2015) . Due diligence means doing all that is necessary to have a proper understanding of whatever an asset manager is investing into. It entails the avoidance of assumptions such as because a company is large and global, it must be a secure investment.
Finally, several new laws, rules, and regulations have been put in place both locally in Hong Kong, within international investment markets and also within the local markets in other investment hubs globally (Fong, 2013) . Traditionally, asset managers found it to bend and extend laws, rules, and regulation as a common part of practice. This approach can in some circumstances lead to some investment decisions that result in vast profits for investors. It, however, leaves no safety nets in the case something goes wrong. It is for this reason that under the new regiment of best practice rules, strict adherence is enforced. The SFC has since 2008 indicted, prosecuted, and achieved convictions for several high profile asset managers in a bid to ensure that this best practice rule is adhered to (Fong, 2013) .
References
Azis, I. J., & Shin, H. S. (2015). Managing Elevated Risk Global Liquidity, Capital Flows, and Macroprudential Policy—An Asian Perspective. Singapore: Springer
Fong, E. (2013, July 22). Plugging the gaps in financial regulation in HK. Retrieved July 26, 2017, from http://www.scmp.com/comment/insight-opinion/article/1053189/plugging-gaps-financial-regulation-hk
