Hong Kong policy address sets out offshore yuan, capital markets push

By Reuters News

HONG KONG, Sept 16 (Reuters) - Hong Kong will step up efforts to cement its role as an international financial hub by expanding its offshore yuan business, deepening capital markets and growing its asset, wealth and commodities sectors, Chief Executive John Lee said in his 2026 policy address on Wednesday.

Here are some detailed measures:


OFFSHORE RMB AND FIXED INCOME

  • Hong Kong Monetary Authority is exploring enhancements of the Currency Swap Agreement with the People's Bank of China to strengthen offshore yuan market liquidity.

  • HKMA will introduce a tendering mechanism of seven-day offshore yuan liquidity for banks to meet their short-term financing needs, and explore the issuance of offshore yuan short-term debt instruments.

  • The Hong Kong Exchanges and Clearing Limited will launch the HKEX Offshore RMB Bond Index as a reference for market trends and an underlying index for exchange-traded funds, and enrich its yuan foreign exchange futures products.

  • HKMA will explore expanding product scope under the Southbound Bond Connect to include products with Hong Kong Dollar bonds and yuan bonds as underlying assets.

SECURITIES MARKET

  • SFC will begin consultation on streamlining prospectus disclosure requirements in 2027 to facilitate the listing of quality overseas enterprises in Hong Kong.

  • HKEX will launch a consultation in the first half of next year on amendments related to specialist technology listing, including a review of the market capitalisation threshold.

  • HKEX is collaborating with the HKMA to introduce a wholesale central bank digital currency for after-hours trading of derivatives.

ASSET AND WEALTH MANAGEMENT

  • SFC will streamline its procedures to attract quality overseas REITs to Hong Kong for dual-listing.

  • Promote investment by mainland insurance funds in Hong Kong ETFs through mutual market access, expand the scope of eligible ETF products under the scheme.

COMMODITIES

  • The government will officially launch Hong Kong's central clearing and settlement system for gold in the first quarter of 2027.

  • HKEX will announce details of the new yuan-denominated and physically settled gold futures contracts this year to boost the global influence of the yuan in the pricing of precious metals.

  • SFC will enhance the regulatory regime for over-the-counter derivatives to facilitate risk and capital management in gold and commodity trading.

  • HKMA is exploring the possibility of increasing the Exchange Fund's gold holdings and participating in Hong Kong's spot and futures markets. It is also considering gradually transferring its physical gold holdings to designated vaults appointed by the Hong Kong Precious Metals Central Clearing Company Limited.

  • The government will implement a half-rate tax concession for physical commodity trading to attract more commodity traders to set up or expand their businesses in Hong Kong; explore a proposal to provide tax concessions for qualifying activities within the gold and commodity trading ecosystem for consultation with the Legislative Council next year.

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