Hong Kong seeks to hone edge as offshore yuan hub, digital-asset front runner

Hong Kong is aiming to sharpen its competitive edge as an offshore yuan hub, an asset and wealth management base, and a digital-asset front runner under Financial Secretary Paul Chan Mo-po’s budget released on Wednesday.Market participants largely welcomed Hong Kong’s renewed push to strengthen its position as an international financial centre, after Chan highlighted the city’s unique role in driving the yuan’s internationalisation and capital account opening.The initiative comes as Beijing deepens its high-standard opening-up drive amid accelerating de-dollarisation and growing investor demand for alternative assets. With China aiming to become a global financial powerhouse, Hong Kong is seeking to stay ahead by leveraging its role in handling more than 75 per cent of offshore yuan settlements and by making yuan-denominated investment products a key priority.Chan said Hong Kong would issue yuan-denominated bonds of varying tenors regularly to enrich product offerings in the offshore yuan market and improve the yield curve. It will also seek to attract “high-quality issuers” to offer yuan notes in Hong Kong while tapping into emerging markets to bring more cross-boundary yuan transactions to the city.By issuing yuan-denominated bonds, especially of longer tenors, the authorities hoped to broaden the investor and issuer base, a government source said. The insider added that the high-quality issuers would be the likes of sovereign entities and multilateral development banks, given their almost risk-free credit profiles, which would serve as examples for other overseas companies to follow.Financial Secretary Paul Chan delivers his budget. Photo: Sam TsangDim sum bonds – yuan-denominated notes issued outside mainland China – have become a mainstream financing tool as tech firms and global companies tap deeper yuan liquidity amid a stronger currency.