Hong Kong financial systems ‘to become more robust’ in second Trump term

The head of Hong Kong’s de facto central bank has pledged to ensure the city’s financial systems are robust enough to mitigate risks, predicting that intensifying geopolitical rifts will rock markets after Donald Trump begins his second US presidential term. Eddie Yue Wai-man, CEO of the Hong Kong Monetary Authority (HKMA), also said on Sunday that new policies had been approved for yuan stock products and they would soon launch on the market. His announcement coincided with a call from Financial Secretary Paul Chan Mo-po for Hong Kong to seize new development opportunities in emerging markets following his trip to Indonesia last week. Yue said divergent monetary policies across the globe were creating risks for Hong Kong’s financial markets, with uncertainties surrounding domestic policies in the United States potentially affecting the city. “For example, will tax reductions, anti-immigration measures and spending cuts lead to inflation, resulting in diverging interest rate trends?” he said on a radio show. “The greater concern lies in foreign policy, such as tariffs, which are likely to introduce further uncertainty.” Trump, who will take office on January 20, has promised to impose 60 per cent tariffs on all Chinese imports, though analysts in recent days have cast doubts on whether the levies will actually go that high. Analysts earlier predicted that financial services in Hong Kong could also come under increased scrutiny during the second Trump administration, particularly with his cabinet including at least three China hawks. Yue cautioned that diverging monetary policies around the world would also make capital flows more volatile. While the US could slow down its pace of interest rate reduction, other countries such as Japan might need to raise rates as inflation increased, he added. The HKMA CEO stressed the importance of maintaining a robust banking and financial system to protect the city against risks, by ensuring sufficient bank capital flows and implementing effective supervision. Yue also said that Hong Kong had been supporting Beijing’s promotion of the internationalisation of the yuan, and that new stock products for the currency would be launched soon. According to data from the HKMA, deposits in Hong Kong’s banking system rose by 6 per cent in the first 11 months of 2024. Yue said that many large and leading mainland firms had come to Hong Kong to list on the city’s stock exchange, which would help develop capital markets. The momentum of the city’s economy was expected to continue into 2025, he added. The CEO also noted a change in perceptions of the city among European and American investors, with attendees at last year’s Global Financial Leaders’ Investment Summit having a positive outlook towards Hong Kong. No one had asked about the impact of the city’s two national security laws, with investors more interested in understanding the mainland’s economic development and opportunities for Hong Kong to act as a bridge, he said. Meanwhile, finance chief Chan discussed his recent trip to Indonesia, saying he had discovered many opportunities that Hong Kong could tap into as he touted the city’s strengths as a capital-raising centre to local government officials and business elites. The minister described the Indonesian economy as “full of vitality” and the Southeast Asian country as a place where “business opportunities were booming”. Chan said that during his trip, he found many areas in which Hong Kong could help Indonesia develop and create value, such as financial services, artificial intelligence and green technology. “In addition to finance and innovation and technology [I&T], Hong Kong, as an important bridge connecting the country and the world, can play an important role in promoting trade and mutual investment,” he said. The minister also noted that China and Indonesia’s bilateral ties had deepened in recent years, and that many mainland companies were looking to the Southeast Asian country to serve as an “important node” in their supply chains. “When I communicated with local executives of Chinese-funded enterprises, they all agreed that when mainland enterprises ‘go global’, Hong Kong can provide them with strong support in supply chain management, trade financing, treasury management, professional consultants and talent support,” he said. Chan also met Kao Kim Hourn, the secretary general of the Association of Southeast Asian Nations, during his trip and discussed how to strengthen exchanges and cooperation in areas such as commerce, I&T, tourism and education. The finance chief said that economies in emerging markets such as Southeast Asia, the Middle East, and others in the Global South were in a stage of “relatively rapid growth,” and that their governments were determined to accelerate economic development. “This provides new development opportunities for Hong Kong businesses and capital, and we must seize them,” Chan said.

Hong Kong financial systems ‘to become more robust’ in second Trump term

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Hong Kong Monetary Authority CEO makes pledge as he predicts markets this year will be rocked by intensifying geopolitical rifts

Hong Kong Monetary Authority CEO makes pledge as he predicts markets this year will be rocked by intensifying geopolitical rifts