Hong Kong seeks to hone edge as offshore yuan hub, digital-asset front runner
Market participants largely welcome Paul Chan’s renewed push to strengthen Hong Kong’s position as an international financial centre
The initiative comes as Beijing deepens its high-standard opening-up drive amid accelerating de-dollarisation and growing investor demand for alternative assets. With China aiming to become a global financial powerhouse, Hong Kong is seeking to stay ahead by leveraging its role in handling more than 75 per cent of offshore yuan settlements and by making yuan-denominated investment products a key priority.
Chan said Hong Kong would issue yuan-denominated bonds of varying tenors regularly to enrich product offerings in the offshore yuan market and improve the yield curve. It will also seek to attract “high-quality issuers” to offer yuan notes in Hong Kong while tapping into emerging markets to bring more cross-boundary yuan transactions to the city.
By issuing yuan-denominated bonds, especially of longer tenors, the authorities hoped to broaden the investor and issuer base, a government source said. The insider added that the high-quality issuers would be the likes of sovereign entities and multilateral development banks, given their almost risk-free credit profiles, which would serve as examples for other overseas companies to follow.
Dim sum bonds – yuan-denominated notes issued outside mainland China – have become a mainstream financing tool as tech firms and global companies tap deeper yuan liquidity amid a stronger currency.