PriyaPatelTLDR:
- China’s financial authorities will continue to support Hong Kong as China’s global financial center and encourage the issuance and trading of more bonds and green financing instruments in the city.
- Banks domiciled in Hong Kong and Macau will have a broader business scope, including the issuance of bank cards.
- Financial firms from Hong Kong and Macau will have a lower qualification threshold to invest in mainland insurers.
- Chinese banks and insurers will be encouraged to issue yuan-denominated bonds and other financial instruments related to green financing in Hong Kong.
Beijing’s financial authorities have reaffirmed their support for Hong Kong as China’s global financial center, aiming to open the doors for more bonds and green financing instruments to be issued and traded in the city. Li Yunze, Minister of the National Financial Regulatory Administration (NFRA), announced that the mainland branches of banks domiciled in Hong Kong and Macau will be allowed a broader business scope, including the issuance of bank cards. Additionally, financial firms from the two special administrative regions will have a lower qualification threshold to invest in mainland insurers. Li emphasized Hong Kong’s role as an international financial center with a liquid financial market, large talent pool, and sound legal environment.
China will encourage its banks and insurers to issue yuan-denominated bonds and other financial instruments related to green financing in Hong Kong. Li believes that these issuances will further support Hong Kong’s bond market and its role as an offshore yuan trading center. The announcement resonated with Egypt’s finance minister Mohamed Maait, who expressed interest in exploring opportunities to issue green bonds and other sustainable finance instruments in multiple currencies. Hong Kong’s chief executive, John Lee Ka-chiu, stated that the city will be at the heart of the eastward shift of economic prospects.
In addition to supporting Hong Kong as a global financial center, China will continue to open its economy and financial system to global investors. Li emphasized the country’s commitment to its long-term state policy of an open-door policy and the importance of the financial sector in driving the country’s financial markets. China’s various transborder investment channels, such as the Connect schemes, will continue to be enhanced and enlarged, allowing for more capital to flow from abroad via Hong Kong into mainland bonds, stocks, and derivatives. Similarly, mainland capital will be allowed to flow into international issues via Hong Kong.
Overall, China’s continued support for Hong Kong as a global financial center and its commitment to opening its economy and financial system provide opportunities for further development and growth in the city’s financial sector.
