In his Budget speech today, Financial Secretary Paul Chan emphasised Hong Kong’s status as an international financial centre that dovetailed perfectly with the needs of the nation and was attuned to the pulse of the global capital markets over the past few decades.

Mr Chan said following the continuous expansion and implementation of various policies to promote the transformation of the market structure in recent years, Hong Kong’s role and function as the international financial centre of the nation have been further enhanced. 

He noted that the 14th Five‑Year Plan expressly supports Hong Kong in enhancing the city’s status as an international financial centre, strengthening its functions as a global offshore renminbi (RMB) business hub, an international asset management centre and a risk management centre, as well as deepening and widening mutual access between the financial markets of Hong Kong and the Mainland.

Securities, bond markets 

The Financial Secretary stressed that developing the bond market in Hong Kong has been one of the Government’s key objectives in recent years.  Apart from promoting the diversification of bond products, the city strives to move towards the development direction of financial inclusion, enabling the public to participate and benefit from such inclusion.

The Steering Committee on Bond Market Development in Hong Kong, which was set up last year, has reviewed the current situation of the bond market in Hong Kong and put forward recommendations along three directions: enhancing market landscape, market infrastructure and market promotion to further promote the development of the Hong Kong bond market. The Government will progressively implement these recommendations.

Mr Chan pointed out that the Government has been committed to promoting the development of retail bonds so as to benefit the public. It plans to issue no less than $15 billion of inflation linked retail bonds and no less than $35 billion of Silver Bond in the next financial year, with a view to offering members of the public, particularly the elderly, investment options with steady returns. It also plans to continue to issue no less than $10 billion of retail green bonds in the next financial year.

Offshore RMB hub

A working group has been formed and it has completed the feasibility study on allowing stocks traded via the Southbound Trading of Stock Connect to be denominated in RMB, and put forward recommendations on detailed implementation. The working group will start making preparations in this regard, and will discuss with the regulatory authorities and relevant organisations in the Mainland. The Government will roll out supporting measures such as waiving the stamp duty on stock transfers paid by market makers in their transactions, so as to increase the liquidity of RMB denominated stocks. 

Family offices

Mr Chan said after discussing and examining the relevant arrangements with the asset management sector, the Government is proposing to provide tax concessions for the eligible family investment management entities managed by single‑family offices.

The Government will consult the sector on the detailed proposal as soon as possible and aim to submit legislative amendments to the Legislative Council (LegCo) within the current legislative session. It is expected that the relevant tax concessions will come into effect in the year of assessment 2022/23.

Green, sustainable finance

The Financial Secretary said the Green & Sustainable Finance Grant Scheme launched last year has been well received by the industry and over 50 applications have been approved so far.

“To support enterprises in obtaining green financing, we will lower the minimum loan size from $200 million to $100 million in respect of applications for subsidies for covering external review costs under the scheme,” Mr Chan added.

Financial technology

The Government will allocate funding of $10 million for launching a new round of the Fintech Proof of Concept Subsidy Scheme this year.  The aim is to promote continuous innovation by encouraging the financial industry to conduct Proof of Concept projects on more financial services and products. The Government also proposes to provide subsidies to research institutions under the new round of the scheme, so that they can put forward solutions on how to remove development bottlenecks faced by the Fintech industry in Hong Kong.

GBA investment

Finally, Mr Chan pledged to increase the funding allocated to the Hong Kong Growth Portfolio under the Future Fund by $10 billion, of which $5 billion will be used to set up the Strategic Tech Fund.  As for the remaining $5 billion, it will be used to set up a GBA Investment Fund, which will focus on investment opportunities in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA).