Key facts
- China is enhancing Hong Kong's financial integration with mainland markets.
- The southbound Bond Connect quota for mainland investors in Hong Kong bonds increased to 800 billion yuan.
- The RMB liquidity facility between the PBOC and HKMA was raised to 500 billion yuan.
- Hong Kong launched a central clearing system for gold and revived US dollar gold futures trading.
- HKEX's clearing unit plans to seek direct access to China's CIPS payment system.
China is implementing a series of financial measures to strengthen Hong Kong's position as a global financial center and an offshore renminbi hub. These initiatives include expanding cross-border investment channels and developing new gold trading infrastructure.
At the Hong Kong Fixed Income and Currency Summit and Bond Connect Forum, People's Bank of China Governor Pan Gongsheng announced key priorities. The southbound Bond Connect program's annual net investment quota for mainland investors in Hong Kong bonds has been increased to 800 billion yuan from 500 billion yuan, with expanded eligibility to include Hong Kong dollar and renminbi-denominated bonds, as well as Macau's bond market.
To bolster liquidity, the PBOC will raise its renminbi facility with the Hong Kong Monetary Authority (HKMA) to 500 billion yuan from 200 billion yuan, with a maximum tenor of three years. The PBOC also confirmed its first transaction under a new repurchase tool, allowing the HKMA to access renminbi liquidity using high-grade Chinese government bonds as collateral.
Hong Kong is also advancing its goal to become a regional gold trading and storage hub. Chief Executive John Lee announced the launch of a central clearing system for gold and the revival of US dollar gold futures trading. The city is exploring renminbi-denominated gold futures and has initiated a "Delivery Connect" program with the Shanghai Gold Exchange for cross-border bullion settlements. The government aims to increase Hong Kong's total gold storage capacity to over 2,000 tonnes by 2030 and is developing tax incentives for gold trading.
Julia Leung, CEO of the Securities and Futures Commission (SFC), detailed plans for a new electronic platform, developed with the PBOC's trading unit, to improve efficiency in secondary bond and foreign exchange trading. Pan also stated that China would increase the proportion of its foreign exchange reserves allocated to Hong Kong's financial markets and is supporting the launch of five-year renminbi government bond futures in Hong Kong.