Speech by FS at Hong Kong Fixed Income and Currency Forum (English only) (with photo/video)
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Deputy Governor Zou 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), distinguished speakers and guests, ladies and gentlemen,
Good morning. It is my pleasure to join you today at the very first Hong Kong Fixed Income and Currency Forum. While the inclement weather has brought us together in a virtual setting, I am confident that the quality of discussions and exchange of ideas will be no less engaging. This conference promises to be both inspiring and productive.
A Strong Foundation amid Global Shifts
Hosting this forum in Hong Kong is very timely. This year, Hong Kong has once again captured the attention of global investors. In a world marked by geopolitical tensions and rising unilateralism, international investors are increasingly seeking to diversify their asset allocations. At the same time, Chinese tech enterprises like Deep Seek have inspired renewed optimism about the region's technological prowess and investment prospects. Capital is flowing in because Hong Kong is both a safe haven and a market offering superior returns. Our stock market is reflecting this momentum.
Yet, what is often less highlighted is our fixed income and currency (FIC) market, which also offers compelling prospects. In fact, the Asian international bond market has been flourishing in recent years, with issuance volumes growing on average at 16 per cent per annum over the past 15 years. This far outpaces the global average of less than 4 per cent.
Hong Kong is a leader in this space. Last year, international bond issuance here exceeded US$130 billion. In fact, in 9 out of the past 10 years, Hong Kong topped Asia and captured nearly 30% of the regional market. Even more impressively, 45% of the region's green and sustainable bonds were arranged by us.
It helps that Hong Kong is the world's largest offshore RMB hub. We processed over RMB 3 trillion in payments daily in 2024, and maintain the deepest RMB liquidity pool outside the Chinese Mainland. This is becoming a key pillar of Hong Kong's vibrant foreign exchange market, which now ranks fourth globally.
As RMB gains traction as a trade, investment and reserve currency, global investors are seeking more investment products and risk management tools denominated in RMB. Hong Kong is actively seizing these opportunities.
With the strong support from the Central Authorities, Hong Kong has become the offshore centre for RMB sovereign bonds. The Ministry of Finance has issued RMB sovereign bonds in Hong Kong for 17 years in a row, with cumulative value exceeding RMB 410 billion. Moreover, Mainland provinces and municipalities, such as Hainan, Guangdong and Shenzhen, have also issued bonds here to support their sustainable development. The HKSAR (Hong Kong Special Administrative Region) Government is also increasing the issuance of RMB-denominated bonds, which account for more than 20% of all bonds that we have issued thus far.
The dim sum bond market in Hong Kong is also thriving, reaching RMB 1 trillion last year, doubling that of 2021. In addition, the diversity of issuers is expanding. A notable example is the RMB 2 billion 3-year bond issued by the Development Bank of Kazakhstan earlier this month. It is the first of its kind by a government in Central Asia.
These encouraging developments are enriching Hong Kong’s fixed income ecosystem, including the growth of products like fixed income ETFs, the product suite of which is also expanding, providing exposure to US Treasuries, Chinese government bonds, Asian bonds, green bonds, and more.
Above all, Hong Kong's FIC market offers a unique value preposition. Under the "one country, two systems" framework, we uphold the free flow of capital and information. Our currency is pegged to the US dollar with a relatively stable exchange rate, and it is freely convertible. At the same time, we have established mutual market access arrangements with the Chinese Mainland. Together, these strengths give global issuers and investors access to deep liquidity in an efficient, familiar and trusted environment.
Breaking New Ground in a Changing Landscape
Looking ahead, Hong Kong is committed to building an even more vibrant FIC ecosystem, one that creates lasting value and new opportunities for international issuers and investors. To this end, we are driving forward on three fronts.
First, we are enhancing 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 explore centralised asset management and cross-collateralisation of 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 and optimise their value. For example, such assets could be collateralised to provide liquidity and enable derivative products to be developed. This arrangement will be made available also to assets under the various mutual market access schemes.
In parallel, the Securities and Futures Commission is exploring the feasibility of creating an electronic bond trading platform to be built and operated by market participants. It is aimed at broadening participation and enhancing market efficiency, transparency and resilience.
On the international front, we are actively seeking cross-border collaboration on debt securities depository and settlement with more global partners, including the UAE (United Arab Emirates) and Switzerland.
Second, we are strengthening market liquidity and expanding product offerings. We are committed to broadening the FIC product issuer base and encouraging more corporates to raise funds through Hong Kong's bond market.
One example is the establishment of a commercial repo market and a central counterparty regime, both of which will enhance secondary 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 actively providing liquidity support, exploring more use cases of RMB and encouraging the development of RMB-denominated investment and risk management products. As part of such efforts, the HKMA is providing banks in Hong Kong with a trade finance liquidity facility of RMB 100 billion. We will also continue to expand and deepen mutual market access schemes with the Mainland. This will further enrich the product offerings available to both Mainland and international investors.
Third, embracing financial innovation. Tokenisation of real-world assets, including bonds and other financial instruments, is opening 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 of tokenised green bonds, making us the first government in the world to do so. Preparation for a third tranche is already under way and we plan to regularise this.
Another example, of course, is the HKMA's Project Ensemble, which provides a sandbox to test the tokenisation of traditional financial products, including money market funds and others. The SFC has also been working with the HKMA to promote the wider adoption of tokenisation in the asset management industry.
On the private market side, the SFC authorised Asia's first batch of three tokenised retail money market funds earlier this year. As of June this year, these three funds reached a combined AUM of US$350 million, with a 74% quarter-on-quarter growth. In July, two more tokenised retail money market funds were approved, further demonstrating the market's growing appetite for such 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 outlines 10 initiatives across four focus areas: boosting primary market issuance, enhancing secondary market liquidity, expanding offshore RMB business, and building next-generation market infrastructure.
This roadmap represents a shared commitment between 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 FIC markets, 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.
Ends/Thursday, September 25, 2025
Issued at HKT 11:57
Issued at HKT 11:57
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