Latest news with #PaulChan
South China Morning Post
8 hours ago
- Business
- South China Morning Post
Hong Kong's finance minister urges HKEX to ‘internationalise' and gear up for next phase
Hong Kong's finance minister has urged the city's bourse operator to take steps to make it more attractive for overseas companies to list and introduce new products for trading digital assets. Speaking at a ceremony on Friday to mark 25 years of Hong Kong Exchanges and Clearing (HKEX) as a listed company, Financial Secretary Paul Chan Mo-po said he also wanted the exchange to be technically prepared to become the first bourse in the region to shorten the transaction settlement time to one day – T+1. 'The transformation of HKEX reflects the extraordinary rise of our country and Hong Kong over the past quarter of a century, underlining our pivotal role in supporting the opening-up of the mainland's financial markets,' Chan told hundreds of attendants at the HKEX Connect Hall, which was the exchange's trading floor until 2017. Looking ahead, Chan said the HKEX needs to 'internationalise', pointing out that 60 per cent of the 2,600 listed companies were from the mainland and accounted for 80 per cent of the market capitalisation. HKEX chairman Carlson Tong (left) and Financial Secretary Paul Chan strike a gong to officially launch the celebrations to mark the exchange's 25th anniversary on Friday. Photo: Elson Li 'Amid growing geopolitical challenges, Hong Kong has become a safe harbour for international investors seeking to diversify their portfolios,' he said. 'HKEX can also emerge as a preferred listing platform for companies from Asean, the Middle East and other regions, especially those that find it challenging to access capital markets in the US or Europe.'
Asia Times
14 hours ago
- Business
- Asia Times
Hong Kong's stablecoin moment eclipses dollar peg debate
As global markets obsess over Hong Kong's 42-year-old currency peg to the US dollar, Financial Secretary Paul Chan seems more intrigued by the next four decades for the city's economy. The currency speculators testing the Hong Kong monetary authority have a point, of course. The Hong Kong dollar is experiencing extreme volatility as the US exchange rate gyrates amid questions about Donald Trump's tariffs and the direction of US Federal Reserve policy. To be sure, there is no serious discussion about Hong Kong abandoning its current 7.75–7.85 fixed rate band to the US dollar anytime soon. But the Trump 2.0 era financial chaos is straining the peg as rarely before. That has Hong Kong policymakers and markets alike wondering if there is a better currency framework for the city. But the real intrigue in Chan's office lies in implementing Hong Kong's new stablecoin legislation. By expanding its cryptocurrency licensing regime and embracing an 'open model' system for digital assets, Chan's administration hopes to morph Hong Kong into a crypto hub. The plan is to encourage overseas institutions to issue such cryptocurrencies in Hong Kong. Not only might it boost competitiveness, but it also offers the city a first-mover advantage over the US and Singapore in global payments. Chan puts the global market value of stablecoins at about US$240 billion, with trading volume topping $20 trillion in 2024. As the Hong Kong Monetary Authority puts it, the bill will 'enhance Hong Kong's existing regulatory framework on virtual-asset activities, thereby fostering financial stability and encouraging financial innovation.' Hong Kong was early to the space. In 2023, regulators launched a virtual asset licensing regime. It requires crypto firms that officially operate in Hong Kong to obtain licenses and meet certain standards to ensure the protection of retail investors. 'Hong Kong's new stablecoin policy sets a global benchmark by mandating full reserve backing, strict redemption guarantees and HKMA oversight,' YeFeng Gong, risk and strategy director of HashKey OTC, tells CNBC. The idea is that once there are global payments systems on blockchain for companies and consumers, the impacts of sanctions, tariffs and other kinds of trade curbs will be mitigated. In theory, average citizens may be able to use HK dollar stablecoins to settle overseas purchases through apps like Alibaba Group's Alipay as early as next year, with the exchange rate difference dropping to zero. It's the nightmare moment many banks have been dreading. The US, too, presumably. In March, US Treasury Secretary Scott Bessent said the US would use stablecoins to ensure the US dollar hegemony in payments and protect its reserve-currency status. 'As President Trump has directed,' Bessent said, 'we are going to keep the US dollar the dominant reserve currency in the world, and we will use stablecoins to do that.' Of course, the US is having enough trouble with 'fiat' money. A 'lackluster' auction of US Treasury securities fueled worries about disappearing demand while the supply of new debt increases. This came amid Moody's Investors Service's downgrading of the US's AAA credit rating as national debt heads toward $37 trillion. Ray Dalio, founder of Bridgewater Associates, says Washington's fiscal trajectory is a bigger-than-acknowledged. Mark Haefele, chief investment officer at UBS Global Wealth Management, says that 'while the selling of US Treasuries in the immediate aftermath of the Moody's downgrade was relatively modest, Treasury yields have climbed steadily since the end of April as budget negotiations have come to the fore.' Could stablecoins help address the problem? In a May 2025 study, Sang Rae Kim, economist at Kyung Hee University, looked at how reserve-backed stablecoins affect the Treasury markets and credit intermediation. Kim found that large stablecoin 'issuance events induce statistically significant increases in Treasury prices.' Yet as Chan's team plans for the future, current economic dislocations are creating challenges. Not least of which is being caught between a brawling US and China. Even so, it's worth remembering that Hong Kong's currency peg is the ultimate 'widow maker' trade. For more than two decades, hedge fund managers, George Soros most famously, have tested the HKMA. The peg endured years later, even as speculative investors like Kyle Bass, founder of Hayman Capital Management, and Bill Ackman, chairman of hedge fund Pershing Square Capital Management, bet against it. Through assertive market intervention and fancy footwork, the HKMA has preserved the roughly 7.8 exchange rate established in 1983. For generations, Hong Kong's iron-clad link to the world's reserve currency served the economy well. Stability affords investment banks, exporters and entrepreneurs confidence to headquarter Asian operations in the city. It has long been touted as Hong Kong's secret weapon. The most famous such assault came in 1997 and 1998 from Soros, who 'broke' the British pound. After attacking the Malaysian ringgit and Thai baht, Soros targeted Hong Kong's peg and stocks. He lost. The HKMA overwhelmed Soros and his acolytes with a $15 billion show of force. In targeting Hong Kong in recent years, hedge fund players like Bass tested Chinese leader Xi Jinping's mettle. One big worry is control. Hence, economist Zhou Luohua of Renmin University of China calls the peg the economy's 'Achilles' heel.' 'If property and stock prices start to fall, the Hong Kong Monetary Authority can't provide sufficient liquidity like the Federal Reserve or other central banks as its money supply capacity is determined by the size of its US dollar reserves,' Zhou explains. 'If asset prices are plunging, it would trigger an exodus of funds at the same time, translating into a 'double hit' for the Hong Kong economy.' In April 2018, former HKMA head Joseph Yam argued it's time to scrap the peg so that Hong Kong can protect itself in times of turmoil. As China reduces capital controls, Yam worried 'small' Hong Kong risks getting swamped by 'huge' mainland money flows. There are some options, of course. The most obvious: soften the peg by establishing a Singapore-style basket of currencies. If the HKMA has greater flexibility, it could more easily vanquish the Soros's and Bass's of the world as well as property hoarders. Maintaining the status quo, Yam cautions, means even less affordable housing. It also makes Hong Kong more of an arbitrage vehicle between US and Chinese investors than a place that shares its fruits with middle-class households. Still, odds are that the peg is not going anywhere anytime soon. The protests in recent years challenging China's influence came as Trump's tariffs – both from 2017 to 2021 and now – throw Xi's economy off balance. China might decide that now isn't the time for experimentation with the dollar peg. Yet there is experimentation in the digital asset space that could render these 'old economy' concerns moot. And help Hong Kong get its financial groove back in short order. Follow William Pesek on X at @WilliamPesek
South China Morning Post
3 days ago
- Business
- South China Morning Post
Hong Kong to act as launching pad for Chinese companies' global push in pact with Shanghai
Mainland Chinese companies will use Hong Kong's capital market as the launching pad for their global growth, according to an action plan signed on Wednesday with Shanghai to connect the premier onshore commercial city with the nation's offshore financial hub. Advertisement The two cities will expand the decade-old Connect programme linking the stock markets of Shanghai and Hong Kong with more equities, bonds, exchange-traded funds (ETFs) and gold, as well as working on cross-border settlements and uses of the digital yuan, according to the agreement signed at the annual Lujiazui Forum in Shanghai. 'Shanghai and Hong Kong are both international financial centres and have always played an important role in the country's financial reforms,' Hong Kong's Financial Secretary Paul Chan Mo-po said after signing the plan with Shanghai's executive vice mayor Wu Wei. 'The plan further clarifies the specific direction of cooperation between Shanghai and Hong Kong, and injects new and richer content into the multilevel and multi-field financial cooperation between the two cities. It is a new measure to deepen connectivity, and it highlights support to the 'go global' drive by mainland companies.' This was the first agreement signed since the annual forum began in Shanghai's financial zone in 2008. The opening session, featuring speeches by the governor of the People's Bank of China and the chairman of the China Securities Regulatory Commission , is considered an important platform for Beijing to unveil market liberalisations or signal policy directions. Hong Kong Financial Secretary Paul Chan (second from left) and Shanghai's executive vice-mayor Wu Wei (second from right) after signing an accord to deepen financial collaboration between the two cities on June 18, 2025. Photo: Daniel Ren Christopher Hui Ching-yu, Hong Kong's secretary for Financial Services and the Treasury, was expected to participate in a closed-door meeting on Wednesday evening, during which details of operating guidelines would be discussed, according to two local officials familiar with the matter. Advertisement 'Facing the complicated geopolitical situations and volatile markets, Shanghai and Hong Kong need to join hands to strengthen their markets and to capture the opportunities,' Chan said.
South China Morning Post
4 days ago
- Business
- South China Morning Post
Hong Kong, Shanghai to tighten financial ties with alliance at Lujiazui Forum
Hong Kong and Shanghai will sign a deal to increase collaboration in the financial sphere at the Lujiazui Forum on Wednesday, as the cities strengthen links to better withstand the implications of geopolitical tensions. Financial Secretary Paul Chan Mo-po will be present for the signing of an action plan for collaborative development between the two cities on the opening day of the two-day forum in Shanghai, according to a statement from the Hong Kong government, which did not provide more details. The agreement would map out a blueprint for cooperation in 'multiple layers and fields', according to people familiar with the matter. Speculation is buzzing that the two cities will expand the 'connect' schemes that allow cross-border trading and start trials of financial derivative products involving foreign currencies and commodities. Details would emerge after discussions in a closed-door meeting on Thursday that would be attended by Christopher Hui Ching-yu, secretary for Financial Services and the Treasury, according to a separate source who was briefed on the matter. The agreement, called the Action Plan for Collaborative Development of Shanghai and Hong Kong International Financial Centres, would mark the most significant cooperation between the cities since the launch of the Stock Connect scheme in 2014, which has evolved into the most popular conduit for foreign investors in China's US$10.5 trillion yuan-denominated stock market. Closer integration between the two metropolises would put China in a better position to cope with the risk of a financial decoupling from the US, where a cohort of Chinese companies trading on the New York Stock Exchange and the Nasdaq face possible delisting.
South China Morning Post
6 days ago
- Business
- South China Morning Post
New stablecoin law to enhance Hong Kong's financial appeal to global issuers
The expected increase in market demand for stablecoins will encourage licensed institutions overseas to issue such cryptocurrencies in Hong Kong, boosting competitiveness, according to the city's financial chief as it prepares for its regulatory regime to take effect in August. In his weekly blog on Sunday, Financial Secretary Paul Chan Mo-po said that the city market value of stablecoins globally was estimated at around US$240 billion (US$30.6 billion), with trading volume exceeding US$20 trillion last year. 'With the booming digital asset market, the market demand for stablecoins is expected to increase further,' Chan said. 'We have noticed that many market players are very interested in this.' He said after the law comes into effect, the Hong Kong Monetary Authority would process the license applications received as soon as possible to enable qualified applicants to conduct their business, 'bringing new opportunities to Hong Kong's real economy and financial services'. Hong Kong is among the first jurisdictions globally to introduce detailed regulations for the issuance of stablecoins, which are cryptocurrencies typically pegged to a reference asset, such as a fiat currency like the US dollar. The relevant ordinance is scheduled to take effect on August 1. The new regulatory framework provides Hong Kong with one of the most comprehensive legal frameworks for stablecoins and comes amid a worldwide push to regulate digital assets, which some fear could destabilise financial systems due to the ease with which they enable money to cross borders. Coupled with the city's significant offshore yuan holdings and mainland China's restrictions on cryptocurrency use, the new law has raised hopes that the city could secure a prominent position in the stablecoin market, which is currently dominated by US dollar-backed tokens, such as Tether's USDT and Circle's USDC.
