Five-year plan can fuel financial clout of HK（只有英文）
2026年10月27日

Rather than chase new instruments, the city is refining the ecosystem that powers them – upgrading infrastructure, securing liquidity, and drawing in further capital

Finance ministers from 21 Asia-Pacific economies recently met in Hong Kong, the first time the city has hosted them. A practical question sits one level down.

Picture the treasury team of a company running its regional business from Hong Kong. It arranges funding in several currencies, pays across markets and manages the risks that follow. Its question is: how can Hong Kong's services help it operate more efficiently and at lower cost?

"Market infrastructure is the first strand, and gold is the clearest case."

Those needs are a practical lens for reading the Hong Kong's First Five-Year Plan and the Chief Executive's Policy Address. The plan sets the direction; the Policy Address puts dates on it. In our research exchanges with think tanks on the Mainland and in Hong Kong, the same concerns come up: not more products but what makes products usable – settlement, term funding and collateral. The plan's mention of "a capable government working in tandem with an effective market" frames market development as a shared endeavour.

Market infrastructure is the first strand, and gold is the clearest case. The Hong Kong's First Five-Year Plan identifies gold as the entry point for a commodity trading ecosystem. Under the Policy Address, Hong Kong's gold central clearing and settlement system is scheduled for launch in the first quarter of 2027.

Details of the new yuan-denominated, physically settled gold futures are to be announced this year. A half-rate tax concession for physical commodity trading is being put in place, with further concessions for eligible ecosystem activities to go to the Legislative Council for consultation next year. Insurers' underwriting appetite for gold storage is also expected to rise.

Some of this architecture is already taking shape. The Shanghai Gold Exchange opened a vault in Hong Kong in June 2025, and the clearing and settlement system began trial operation in July this year. For a bullion bank, that is a visible path from trade to delivery.

Liquidity is the second strand, and offshore yuan measures connect it to business use. The Hong Kong's First Five-Year Plan calls for wider yuan use in trade, investment and financing. The Policy Address sets out a framework with Bank Indonesia and the People's Bank of China for direct exchange and settlement between offshore yuan and Indonesian Rupiah. Indonesia was at the table during the Asia-Pacific Economic Cooperation (APEC) forum. More foreign banks will be encouraged to join the Mainland's cross-border interbank payment system, directly. These widen yuan payment routes and reduce reliance on a third currency.

Beyond settlement, businesses need financing. A bank can only lend at term if it can fund and price at term. The Hong Kong First Five-Year Plan calls for stronger offshore yuan liquidity support, and banks have taken up that call. The RMB Business Facility was doubled to 200 billion yuan (HK$235 billion) in February; in July it was raised to 500 billion yuan, with tenors out to three years.

The Policy Address also plans short-term offshore yuan instruments to help develop the yield curve. That gives banks room to lend at term.

The emphasis is not just on the size of the pool; its use and what it enables businesses to do also matter. That is the first of two shifts the Secretary for Financial Services and the Treasury, Mr Christopher Hui, set out this month: from pursuing scale to enhancing function. The second is moving from a financial city to a "finance-empowered city".

Together, they are the strategic frame behind the measures and the reason the measures arrive as a set rather than a list. For a bank or a treasurer, they change what to watch. The issue is not how large the pool is but whether term funding, hedging and settlement are there when a transaction needs them.

The third strand is demand: who will invest, and how assets can be used beyond investment. The Policy Address proposes lifting the total investment limit on eligible index-tracking exchange-traded funds (ETFs) by Mandatory Provident Fund funds and promotes investment by Mainland insurance funds in Hong Kong ETFs through mutual market access. Both widen the savings pools that can reach Hong Kong assets.

Bonds illustrate broader asset use. The Hong Kong's First Five-Year Plan calls for broader use of yuan bonds as collateral. Eligible Northbound Bond Connect bonds will be accepted as collateral at more Hong Kong Exchanges and Clearing Limited clearing houses from November, while Southbound Bond Connect bonds are to be used as collateral for repo transactions. These uses give investors reasons to hold bonds for the financing they support, not just for their returns.

The three strands reinforce one another. Market infrastructure supports business activity; funding and payment arrangements let it be financed and settled; investor participation and collateral uses sustain demand for what the market produces. The argument is in the architecture, not the list of measures. Delivery has begun. The Financial Services and the Treasury Bureau announced the gold system's trial run in July, ahead of the launch set for early 2027. The Hong Kong Monetary Authority enlarged the facility twice as banks took it up, and the collateral rules widen from November.

"The five-year plan calls for broader use of yuan bonds as collateral"

A five-year plan cannot make commercial decisions. On September 16, the Chief Executive, Mr John Lee, distinguished binding indicators – "the things we must do" – from those whose achievement depends on more than government action: "it is not the government alone".

The Hong Kong's First Five-Year Plan and the Policy Address give institutions a clearer view of direction and timing, down to the quarter in which gold will clear here. They can now decide what to build and where to commit capital. The APEC ministers have gone home; the parts are still going in. The plan has drawn the architecture; the market completes it.

Head of the Chief Executive's Policy Unit, Dr Stephen Wong