HKMA Chief outlines vision for financial market expansion - Trade Treasury Payments

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HKMA Chief outlines vision for financial market expansion

The Hong Kong Monetary Authority (HKMA) is set to play a crucial role in advancing the government’s latest financial initiatives, particularly in bond issuance and supply chain financing, following the 2025-26 Budget announcement. 

HKMA Chief Executive Eddie Yue outlined the institution’s commitment to executing the government’s financial strategies while strengthening Hong Kong’s position as a leading international financial centre.

Expanding bond issuance for infrastructure development

A cornerstone of the budget is the government’s decision to significantly expand bond issuance to finance strategic infrastructure projects, such as the Northern Metropolis. The government plans to issue HK$150-195 billion in bonds annually over the next five years through the Government Sustainable Bond Programme and the Infrastructure Bond Programme.

According to Yue, Hong Kong’s debt-to-GDP ratio is expected to remain between 12% and 16.5%, a level that is generally considered relatively low and manageable by market participants. 

Yue said: “Besides issuance size, market participants tend to focus more on the use of bond proceeds and the Government’s overall fiscal situation,”.

Investor confidence remains strong, with the government’s institutional bonds in the 2024-25 fiscal year receiving subscription amounts between three and seven times the issuance amounts. The bank’s letter indicates that it believes this trend will continue.

While the government has primarily issued shorter-term bonds in recent years, this has created a need for refinancing. Approximately 56% of the bonds issued in the next five years will refinance maturing short-term debt, while 44% will fund new infrastructure projects. 

Beyond infrastructure financing, government bond issuance plays a broader role in deepening Hong Kong’s financial markets, which can be seen through initiatives such as the Green Bond Programme, which has raised HK$220 billion since its 2018 launch, and tokenised bond issuances.

The HKMA has indicated that it will continue strengthening market engagement and investor outreach to support these developments.

Supply chain financing as a key economic driver

The HKMA is prioritising initiatives to maintain Hong Kong’s role as a multinational supply chain management centre, and the bank understands that financial flows are just as critical as the movement of goods in supply chain operations.

Hong Kong’s banks currently hold HK$380 billion in outstanding trade finance loans, about 40% of which are tied to offshore merchandising trade.

The HKMA has been actively promoting technological innovation to enhance efficiency, including the introduction of an offshore RMB trade financing liquidity facility in collaboration with the People’s Bank of China. Corporate treasury management is also a focus, with tax incentives in place to attract more businesses to establish treasury centres in Hong Kong.

Moving forward

The HKMA knows executing its strategies will require collaboration with government agencies and industry stakeholders. Yue said, “We welcome suggestions on what more we can do to enhance Hong Kong’s competitiveness and look forward to working with stakeholders on this endeavour.”

Hong Kong is positioning itself to remain a vital hub for capital markets and trade finance in the years ahead.