Green bonds, fintech keys for Hong Kong to retain financial hub status

Despite the dire warning by ratings agencies about Hong Kong’s economic outlook, bankers and the city’s top finance official are upbeat on its advantages as a fundraising and yuan trading centre.

“The global cost of the transition to a low-carbon economy is estimated at US$93 trillion between now and 2030. China alone estimates that it needs 2 trillion yuan, or US$350 billion, over the lifetime of the 13th Five Year Plan to meet its targets, with US$77 billion needed purely to tackle air pollution. Financing this change requires a switch from bank finance to bond finance,” Gulliver said on Friday at a forum on Hong Kong’s status as an international financial centre.

“The first green corporate bond issued by a Chinese company was hosted here in Hong Kong already provides a considerable advantage in marketing Hong Kong’s strengths. And whilst other centres are gaining a reputation for green bond issuance, particularly London, they lack the proximity and the market access of Hong Kong. ”

Gulliver said another driving force for Hong Kong would be the internationalisation of the yuan. The city, he pointed out, has 1 trillion yuan and has been acting as a hub for issuing dim sum bonds and other yuan products.

“As part of the world’s next great conurbation, the Pearl River Delta, covering the cities of Hong Kong, Macau, Guangzhou, Foshan and Shenzhen, it already boasts physical, economic and financial links to the engine room of the mainland economy,” Gulliver said.