Hong Kong’s Resilient Financial Centre and Strategic Direction
Financial Secretary Paul Chan’s address at the “Wealth Management Expo 2025” paints a positive picture of Hong Kong’s financial sector, despite global uncertainties. He emphasises Hong Kong’s status as a “safe haven” for capital, citing its free port status, stable financial system, free capital flow, and predictable government policies.
Key Performance Indicators (as of early 2025):
- Stock Market Growth: Hang Seng Index rose 18% last year, and over 15% this year. Average daily stock turnover reached HKD 242 billion in the first five months, a 1.2-fold year-on-year increase. New stock fundraising currently leads globally at nearly HKD 90 billion.
- Banking Deposits: Increased by over HKD 1 trillion last year (7%), and a further 4% this year, totalling over HKD 18 trillion.
- Wealth Management: 976 registered funds as of March, with a net capital inflow of over USD 44 billion, a 285% increase.
Strategic Pillars for Financial Development:
Chan outlined four key areas for Hong Kong’s financial development, reinforcing its position as an international financial centre with strong national support:
- Asset and Wealth Management:
- Expected growth of family offices from 2,700 to 3,000.
- Managed assets in the treasury management industry exceed USD 4 trillion.
- Anticipated to become the world’s No. 1 cross-border asset management centre within 2-3 years.
- Driven by increased capital inflow from the Greater Bay Area (Cross-boundary Wealth Management Connect), with plans to expand to new regions like Shanghai.
- Focus on innovation in investment products, particularly Exchange Traded Products (ETPs), which comprise over 210 listings on HKEX, accounting for over 15% of market turnover.
- Booming private equity and venture capital funds, managing nearly USD 230 billion, second only to mainland China in Asia, supporting innovation and future industries in Hong Kong.
- Offshore Renminbi Business:
- Hong Kong handles approximately 80% of global offshore Renminbi transactions, making it the most active market for RMB foreign exchange and “Dim Sum” bonds.
- Strategic importance highlighted by PBOC Governor Pan Gongsheng’s remarks on the global trend towards a multi-polar international monetary system and diversified cross-border payment systems (e.g., CIPS).
- Efforts to optimise offshore RMB financial infrastructure, enhance RMB liquidity (e.g., enabling RMB trading for 24 Hong Kong stocks, seeking to add RMB counters to Southbound Stock Connect), and enrich RMB investment products and risk management tools.
- Support for Mainland Enterprises “Going Global”:
- Hong Kong offers a robust fundraising market and high-quality financial services for mainland companies seeking international expansion.
- The IPO of CATL in Hong Kong, the largest global IPO this year, raising funds primarily for its Hungarian plant, exemplifies the “Hong Kong fundraising to support international expansion” model.
- Encourages mainland enterprises to establish international business headquarters, supply chain management centres, and treasury centres in Hong Kong.
- Financial Innovation (Digital Assets):
- Strong market interest in digital assets, especially stablecoins.
- Hong Kong “embraces the development of digital assets” and has accelerated the refinement of its legal and regulatory framework.
- Virtual Asset Trading Platform licensing system: 10 licenses issued, 8 applications pending.
- Stablecoin legislation: Completed and effective from 1 August, making Hong Kong one of the first jurisdictions globally to establish a statutory regulatory framework for stablecoins.
The “Four-Way Battle” for Stablecoin Issuance in Hong Kong
The article “Unveiling the Four-Way Battle for Hong Kong Stablecoins” from Wallstreet Insights details the intense competition among various entities to become stablecoin issuers in Hong Kong, ahead of the new legislation coming into effect. This competition reflects the growing global importance of stablecoins for cross-border payments and asset tokenisation.
Key Drivers for Stablecoin Development:
- Global Recognition: PBOC Governor Pan Gongsheng’s public mention of stablecoins at the Lujiazui Forum has heightened market discussion.
- Rapid Growth: Global stablecoin scale increased 45-fold in the past 6 years, expanding from crypto asset anchors to cross-border payment solutions.
- Regulatory Clarity: Hong Kong’s “Stablecoin Ordinance” provides a clear regulatory framework, attracting diverse players.
Outlook:
- The formal launch of Hong Kong’s stablecoin framework is set for 1 August.
- While these four forces are currently in the spotlight, analysts predict that the final number of stablecoin issuers in Hong Kong could reach around ten, suggesting that more capital and contenders are “lying in wait.”
- The competition highlights Hong Kong’s strategic positioning to capture the rapidly growing stablecoin market and reinforce its role as a leading global financial and digital asset hub.