Letters | How Hong Kong can become a hub for belt and road debt issuers
Readers discuss ways to deepen the belt and road debt market, efforts to target elderly residents’ spending power, and lawmakers’ performance
Hong Kong stands at a pivotal moment to cement its role as the premier debt capital market for Belt and Road Initiative issuers. By leveraging the Hong Kong Exchanges and Clearing (HKEX) platform and aligning regulatory incentives, the city can build a deep, liquid and transparent marketplace that serves both issuers and investors across emerging economies.
From HKEX’s perspective, the first priority must be to introduce a market-making programme for listed debt instruments. Committed two-way quotes and minimum presence obligations would transform secondary market liquidity, lift trading volumes and establish Hong Kong as a regional pricing hub for belt and road debt. Price discovery improves when liquidity is reliable, reducing issuance costs and attracting repeat borrowers.
Complementing this, HKEX should launch derivatives on benchmark debt instruments. Futures and options on liquid sovereign, quasi-sovereign and high-grade corporate benchmarks would let investors hedge duration and credit risks efficiently, catalysing participation from global asset managers and banks.
A parallel buildout of foreign exchange capabilities is equally important. Listing spot forex pairs across a broad set of belt and road currencies, alongside a robust suite of forex derivatives, would enable seamless hedging of currency exposure tied to bond investments and primary issuance.
To widen the product shelf and enhance turnover, HKEX should introduce a listing framework for short-term debt providing standardised disclosure, swift time-to-market and clear eligibility criteria. A series of transparent, rules-based bond indices, together with tradeable index derivatives, would further anchor passive and systematic capital, giving investors scalable exposure to belt and road credit segments. Finally, in partnership with the Central Moneymarkets Unit, HKEX should launch an exchange-based repo market with a central counterparty. This would lower counterparty risk, improve collateral mobility and reduce funding costs.