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Enhancing Hong Kong’s status as an international financial centre through promotion of stock and bond investment and financing


Thanks to the strong support of our country for Hong Kong’s financial development, we have opened up a new era of “Mutual Market Access 2.0”, promoting mutual access between the financial markets in the Mainland and Hong Kong. The latest expansion and enhancement of the mutual market access arrangement are multi-dimensional and comprehensive, covering optimisation of trading mechanism, expansion of investment geographical scope and broadening of asset class. Under the “Mutual Market Access 2.0”, Hong Kong’s financial market will evolve again. By leveraging our unique and premier financial platform, we are able to fully satisfy the investment and financing needs of our country and the rest of the world while actively promoting the internationalisation of Renminbi (RMB). With the staunch support of our country, we have full confidence in continuously enhancing Hong Kong’s status as an international financial centre. We will also formulate strategies to cope with international development by putting in place proactive policy measures to create strong impetus for growth and strengthen our competitiveness. “Mutual Market Access 2.0” has provided a stronger and faster growth engine for Hong Kong’s financial development, enabling us to speed up and take a leading position among financial centres.

Optimising trading mechanism
Recently, Dr Fang Xinghai, Vice Chairman of the China Securities Regulatory Commission, stated that the Commission would support a study on allowing trading ofRMB securitiescounters under Southbound Trading of Stock Connect, through which the demand of investment in domestic currency (RMB) from the Mainland would effectively activate the liquidity of offshore RMB-denominated stocks in Hong Kong, thereby providing a new catalyst for the internationalisation of RMB. In response to this, the Financial Services and the Treasury Bureau will promptly roll out two measures to facilitate market development. First, we will exempt the stamp duty on stock transactions conducted by market makers to increase the liquidity of RMB‑denominated stocks. Second, in collaboration with the Hong Kong Exchanges and Clearing Limited, we will proactively approach listed companies to promote the strategic significance and specific benefits of setting up an RMB securities trading counter.In August, regulators of Hong Kong and the Mainland announced their agreement to adjust the Stock Connect trading calendar to allow trading under Stock Connect on the common trading days of the Hong Kong and Mainland stock markets, even if the corresponding settlement day falls on a public holiday. The optimised mechanism will facilitate Hong Kong and Mainland investors’ fuller participation in both markets and management of their investments.

Expanding investment geographical scope
In the new era of “Mutual Market Access 2.0”, securities of overseas enterprises that have primary listing in Hong Kong and fulfil certain conditions will be included in the eligible scope of Southbound Trading under Stock Connect. This new measure will provide robust support for Hong Kong to proactively attract enterprises in the international market (e.g. Countries in Southeast Asia, South Asia and the Middle East) to seek listing in Hong Kong for financing purposes and make use of our various professional services and ancillary facilities for market expansion. This is also one of the key purposes of my visit to Manila next week, during which I will meet with the local business community. To many overseas enterprises, the huge demand for market liquidity and wealth allocation in the Mainland is profoundly attractive. Therefore, the new measure is not only greatly beneficial to the internationalisation of Hong Kong-listed companies, but also highly conducive to strengthening Hong Kong’s strategic role as a connector between the Mainland and the rest of the world in investment and financing.

Broadening asset class
At the beginning of the current-term Government, exchange-traded funds (ETFs) have been officially included in the mutual market access arrangement. The outcome so far has been encouraging. Take the Southbound Trading as an example, its average daily turnover in August was over HK$350 million, representing an increase of more than 60% compared with that in the first month of implementation. Apart from increasing the liquidity of the Maindland and Hong Kong financial market, the mutual market access arrangement has also enhanced our financial function to offer risk management tools. Following the authorisation for Hong Kong to issue offshore A-share index futures last year, our country announced in July this year its endorsement for mutual access between interest rate swap markets in Hong Kong and the Mainland. Recently, the CSRC also expressed clear support for the issuance of Mainland government bond futures in Hong Kong. As far as the development of Mainland market is concerned, the provision of suitable risk management tools to global investors is conducive to ensuring stable long-term capital investment in the Mainland market so that market fluctuation can be mitigated. Upon the announcement of the above three major supporting measures, Hong Kong is set to assume an all-round strategic role of managing risks related to Mainland A shares, interest rate and government bonds, strongly reinforcing our status as an international risk management centre under the 14th Five-Year Plan. In the new era of Market Mutual Access 2.0, Hong Kong has become a unique international platform with effective risk management, where global investors can directly invest in a wide range of securities in the Mainland, including A shares, ETFs and bonds.

Promotion of stock and bond investment and financing
In facilitating Hong Kong’s financial development and the internationalisation of RMB, we strive to promote stock and bond investment and financing. As major global economies are currently entering a period of rising interest rates, the cost of issuing RMB bonds is relatively lower as compared with other currencies like US dollar, which helps drive more issuers to issue dim sum bonds (i.e. offshore RMB bonds) in Hong Kong. In fact, according to market statistics, the amount of dim sum bonds issued in the first eight months of this year is the largest on record of the same period. Riding on the strong momentum of market development, we will, in collaboration with the Guangdong Provincial Development and Reform Commission (Office of the Leading Group on Construction of Guangdong-Hong Kong-Macao Greater Bay Area of Guangdong), organise a seminar on “expanding the offshore RMB bond market and leveraging bond financing to support the development of the Greater Bay Area” this week. On the one hand, the seminar will encourage more Mainland institutions to issue dim sum bonds in Hong Kong; on the other hand, it will allow the Mainland authorities as well as the Government, the business sector and the public of Hong Kong to jointly explore the future direction of leveraging bond financing to support the development of the Greater Bay Area and promote the internationalisation of RMB.

Enhancing Hong Kong’s status as an international financial centre at the crucial moment
With the staunch support of our country, Hong Kong’s financial market will undergo transformation and usher in a new era of “Mutual Market Access 2.0”. We are now well prepared for this in respect of trading mechanism, investment geographical scope and asset class. Given our unique and premier financial platform, we can attract global investors and reinforce Hong Kong’s leading position as an international financial centre. To tie in with the upcoming events, such as the International Financial Investment Summit and the Hong Kong Fintech Week, and through telling the world our financial story, Hong Kong will announce to the global market at this crucial moment that we will strengthen Hong Kong’s international financial connectivity, with a view to creating more new opportunities for investment and financing stakeholders from all over the world.

21 September 2022