Speech by FS at Hong Kong Fixed Income and Currency Forum (with photo/video)
Following is the video speech by the Financial Secretary, Mr Paul Chan, at the Hong Kong Fixed Income and Currency Forum 2025 today (September 25):
Deputy GovernorZou Lan (Deputy Governor of the People's Bank of China, Mr Zou Lan),Deputy Director Qi Bin (Deputy Director of the Liaison Office of the Central People's Government in the Hong Kong Special Administrative Region),Kelvin (Chairman of the Securities and Futures Commission, Dr Kelvin Wong), Eddie (Chief Executive of the Hong Kong Monetary Authority, Mr Eddie Yue), Julia (Chief Executive Officer of the Securities and Futures Commission, Ms Julia Leung), distinguishedspeakers andguests, ladies and gentlemen,
Good morning.It is my pleasure to join you today at the very firstHong KongFixed Income and Currency Forum. While the inclement weather has brought us together in a virtual setting, I am confident that the quality of discussionsandexchangeof ideaswill be no less engaging. This conference promises to be both inspiring and productive.
A Strong Foundationamid Global Shifts
Hostingthis forumin HongKongis very timely.This year, Hong Kong has once again captured the attention of globalinvestors. In a world marked bygeopoliticaltensions and rising unilateralism, international investors are increasingly seeking to diversify their asset allocations. At the same time, Chinesetechenterpriseslike Deep Seekhave inspired renewed optimism about theregion'stechnological prowessandinvestment prospects. Capital is flowinginbecauseHong Kong isbothasafe haven and a market offering superior returns.Our stock marketisreflectingthis momentum.
Yet, what is often less highlighted is our fixed income and currency (FIC) market, which also offerscompelling prospects. In fact,the Asianinternational bond market has been flourishing inrecent years, with issuance volumes growingon averageat 16 per cent per annumover the past 15 years. This far outpaces the global average of less than 4 per cent.
Hong Kong is a leaderinthisspace.Last year, international bond issuance here exceeded US$130 billion.In fact,in 9 out ofthe past10 years, Hong Kong toppedAsiaandcapturednearly 30%ofthe regionalmarket.Even more impressively, 45% of the region's green and sustainable bondswere arranged by us.
It helps that Hong Kong is the world's largest offshore RMB hub.We processedover RMB 3 trillioninpaymentsdailyin 2024, andmaintain the deepest RMB liquidity pool outside the Chinese Mainland. Thisis becoming a key pillarof Hong Kong's vibrant foreign exchange market, which now ranks fourth globally.
As RMB gains traction as a trade,investment andreserve currency, global investors are seeking more investmentproductsand risk managementtoolsdenominated in RMB. Hong Kong isactively seizing these opportunities.
With the strong support from the Central Authorities, Hong Kong has become the offshorecentrefor RMB sovereign bonds. The Ministry of Finance has issued RMB sovereign bonds in Hong Kong for 17 years in a row, with cumulativevalue exceeding RMB 410 billion. Moreover,Mainlandprovinces and municipalities, such as Hainan,Guangdongand Shenzhen, have also issued bonds here to support their sustainable development. The HKSAR (Hong Kong Special Administrative Region) Government is also increasing theissuanceof RMB-denominated bonds, which account for more than 20% of all bondsthatwe have issued thus far.
The dim sum bond marketin Hong Kongis also thriving, reachingRMB 1 trillion last year, doublingthatof2021.In addition, the diversity of issuers is expanding. A notable example is the RMB 2 billion3-year bondissuedby the Development Bank of Kazakhstanearlier this month. It is the first of its kind by a government in Central Asia.
These encouraging developments areenriching Hong Kong’s fixed income ecosystem, including the growth of products like fixed income ETFs, the product suiteof whichisalsoexpanding, providing exposure to US Treasuries, Chinese government bonds, Asian bonds,green bonds, and more.
Above all, Hong Kong'sFICmarketoffers a uniquevalue preposition. Under the"one country, two systems" framework, we uphold the free flow of capital and information.Our currencyispegged to the US dollarwith a relatively stable exchange rate, and itis freely convertible.At the same time,we have establishedmutual market access arrangements with the Chinese Mainland. Together, these strengthsgiveglobal issuers and investorsaccess to deep liquidity in an efficient, familiar and trusted environment.
Breaking New Groundin a Changing Landscape
Looking ahead, Hong Kong is committed to building an even more vibrant FIC ecosystem,one that creates lastingvalue and new opportunities for international issuers and investors.Tothis end, we are driving forwardon threefronts.
First,we areenhancing market infrastructure. This includes strengthening the platforms for custody, management and trading of FIC products, while deepening our connectivity with global financial partners.
As announced in the Policy Address last week, the HKMA and the Hong Kong Stock Exchange will collaborate to explorecentralisedasset management and cross-collateralisationof assets on a single platform. Our goal is to develop a globally competitive, multi-asset class custodial infrastructure, presenting investors with the opportunity to better manage their assets andoptimisetheir value. For example, such assets could becollateralisedto provide liquidity and enable derivative products to be developed. This arrangementwill bemadeavailable also to assets under the various mutual market access schemes.
In parallel, theSecurities and Futures Commissionisexploring the feasibility ofcreating anelectronic bond trading platformto bebuilt and operated by market participants. It is aimed at broadeningparticipation andenhancingmarketefficiency, transparency and resilience.
On the international front, we are actively seeking cross-border collaboration on debt securities depository and settlementwith more global partners, including the UAE (United Arab Emirates) and Switzerland.
Second,we arestrengthening market liquidity and expanding productofferings. We are committed to broadening theFIC productissuer base and encouraging more corporates to raisefundsthroughHong Kong's bond market.
Oneexampleisthe establishmentofacommercial repo market and a central counterparty regime, both of which willenhancesecondary market liquidity.We are also working to expand the use of offshore Chinese Government bonds as collateral across different clearing houses. In this connection, the HKMA and the SFC will jointly promote the development of a market-based CNH yield curve, particularly at the long end.
The offshore RMB market continues to present significant potential. We are activelyproviding liquidity support,exploringmore use cases of RMB and encouraging the development of RMB-denominated investment and risk management products. As part ofsuchefforts,the HKMA is providingbanks in Hong Kong witha trade finance liquidity facilityofRMB 100 billion.We willalsocontinue toexpand anddeepen mutual market access schemes with theMainland. This willfurther enrich the product offerings available to both Mainland and international investors.
Third, embracingfinancialinnovation.Tokenisationof real-world assets, including bonds and other financial instruments, isopening up exciting new frontiers in the FIC market.
We are leading by example. Over the past two years, the Government has issued two pioneering tranches oftokenisedgreen bonds, making us the first government in the world to do so. Preparation for a third tranche isalreadyunder wayandwe plan toregularisethis.
Another example, of course, istheHKMA's Project Ensemble, which provides a sandbox to test thetokenisationof traditional financial products, including money market funds and others. The SFC hasalsobeen working with the HKMA to promote the wider adoption oftokenisationin the asset management industry.
On the private market side, the SFCauthorisedAsia's first batch of threetokenisedretail money market funds earlier this year.As of June this year, these three funds reached a combined AUM of US$350 million,with a74% quarter-on-quarter growth.In July, two moretokenisedretail money market funds were approved, further demonstrating the market's growing appetite forsuch products.
The Fixed Income and Currency Roadmap
Ladies and gentlemen, later today, the SFC and the HKMA will jointly release the Fixed Income and Currency Roadmap, which outlines10initiatives across four focus areas: boosting primary market issuance, enhancing secondary market liquidity, expanding offshore RMB business, and building next-generation market infrastructure.
This roadmaprepresents a shared commitmentbetween the public and private sectors to reinforce Hong Kong's role as a premier FIC hub, ensuring that our markets remain competitive, inclusive, and globally connected.
A Call to Collaboration
The journey to building a world-class, globally competitive FIC market cannot be undertaken by any one party alone. While the Government and regulators can lay the foundation, it is the market—issuers, investors, and intermediaries—that must bring it to life.
So today, I invite all of you to join us on this journey. Let us work together to unlock the full potential of Hong Kong's FICmarkets, and to shape the future of finance in the region and beyond.
Thank you once again for joining us at this inaugural FIC Forum. I wish you all a productive, insightful, and rewarding event, and the best of business and health in the time ahead.
Speech by FS at Hong Kong Fixed Income and Currency Forum Source: HKSAR Government Press Releases
Source: AI-found images
