Hong Kong financial services firms will soon get more access to banking markets on the mainland.

According to an agreement signed on Saturday, mainland tourist will be allowed to stop over in Hong Kong on their way to

Taiwan, while requirements for Hong Kong-based financial firms operating in the mainland have been loosened.

Qualified mainland securities firms can set up subsidiaries in Hong Kong upon approval by regulatory authorities.

Donald Tsang, chief executive of the Hong Kong special administrative region, said the new measures will be mutually beneficial and help mitigate the impact of the ongoing economic downturn.

The agreement, which will come into effect on Oct 1 this year, is a supplement to the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA).

The arrangement is good for the financial sectors both in Hong Kong and the mainland, according to Chan Yan Chong, an associate professor at City University of Hong Kong.
 
"The financial sector of Hong Kong has been severely impacted by the financial tsunami, and it will find a lot of room for development if it can enter the mainland market now," he said. Subsidiaries of a Hong Kong bank in the neighboring province of Guangdong will be able to expand into other cities in the province without first establishing separate subsidiaries there.

The entry of the financial services sector from Hong Kong will also improve the financial sector in the Chinese mainland.

"The expertise and experience of the firms in Hong Kong are what the companies in the mainland need now," said Lu Jinyong, a professor at the University of International Business and Economics.

"And enterprises in the manufacturing sector here will also benefit from the support of these financial firms," he said.

According to the supplement, securities firms in the mainland and Hong Kong will be allowed to set up joint-venture advisory companies in Guangdong. The Hong Kong securities firm can hold up to a third of the stakes in the joint-venture companies.

The introduction of open-end index-tracking exchange-traded funds based on Hong Kong stocks will also be explored in the mainland.

CEPA was first established in 2003. By the end of 2008, it had attracted more than HK$5.1 billion ($650 million) in investment to Hong Kong and created 36,000 jobs in the region, according to Wong Yan Lung, secretary for justice of Hong Kong.