Advertisement
Banking & finance
Opinion
SCMP Editorial
Editorial
SCMP Editorial

Gold, bond push boosts Hong Kong’s role in nation’s financial future

At a time of increasing global instability, Beijing needs to be a financial powerhouse to protect itself and others

2-MIN READ2-MIN
Listen
Hong Kong Chief Executive John Lee delivers a speech at the Hong Kong FIC & Bond Connect Summit at the JW Marriott Hotel Hong Kong, in Admiralty, on July 7. Photo: Sun Yeung
SCMP Editorial
Editorials represent the views of the South China Morning Post on the issues of the day.
Words like gold, bond and yuan are music to Hong Kong leaders’ ears, but they also entail a heavy responsibility. The city has long been a global financial hub. However, our role has now expanded: to be a premier offshore yuan centre not only for ourselves but for the nation. The pieces are falling into place. To internationalise the yuan, Hong Kong will substantially build up the local infrastructure for gold and bond trading.

Why now? Because the world is no longer such a safe and stable place. Central banks and governments worldwide are accumulating gold as more investors seek alternative safe holdings to the US dollar amid often aggressive and erratic policy responses from Washington. To protect itself and others, China needs to be a financial powerhouse, not just the world’s second-largest economy.

The annual southbound Bond Connect quota for mainland investors to buy bonds in Hong Kong will expand to 800 billion yuan (US$117.7 billion) from 500 billion yuan. Meanwhile, Hong Kong will expand trading, storage, transport and pricing for gold. It aims to increase its total gold storage capacity by more than 10 times to over 2,000 tonnes by 2030. It is also working with Shanghai to launch Delivery Connect to facilitate cross-border gold settlements.

Much of global gold buying is now in China and Southeast Asian nations, yet London and New York continue to dominate gold trading, especially in over-the-counter trades and futures. Globally, gold is still priced in US dollars, but the world’s centres of power are shifting east and financial powers need to reflect that new reality. Shanghai is catching up, especially in the trading of physical gold.

Select Voice
Select Speed
1x
AI-generated voice