Xu Zhengyu: Consolidating the advantages of Hong Kong as an international financial center by empowering through four major measures such as "promoting reform, increasing capacity", etc.

On February 26th, the Secretary for Financial Services and the Treasury of Hong Kong, Christopher Hui, introduced the major policy measures related to financial development in the "Budget". He stated that the government will implement four main thematic measures: "Promote Reform", optimizing systems; "Expand Infrastructure", strengthening facilities; "Increase Capacity", expanding scale; and "Enhance Connectivity", deepening cooperation. These measures will fully support the "14th Five-Year Plan" of the country, consolidate and enhance Hong Kong's status as an international financial center, and inject momentum into the economic development of Hong Kong. Christopher Hui mentioned that Hong Kong will continue to strengthen its existing advantages, explore new areas, enhance the market system and risk management, and deepen financial cooperation in the Greater Bay Area to enhance the functions of Hong Kong as an international financial center, contributing to the strategic goal of the country to accelerate the construction of a strong financial nation. The four major thematic measures: "Promote Reform", "Expand Infrastructure," "Increase Capacity," and "Enhance Connectivity" are as follows: 1. Promote Reform Hong Kong is committed to optimizing market rules and regulatory systems through reforms to enhance efficiency and competitiveness. For example, since the implementation of the "No Trading During Typhoon" arrangement by the Stock Exchange of Hong Kong (SEHK) in September 2019, the stock market operated normally on seven trading days affected by severe weather conditions, ensuring market liquidity and generating approximately HK$2.5 billion in stamp duty revenue. This demonstrates the results of the determination to promote reforms. To further optimize, SEHK will consult the market in the first quarter on revising the listing requirements for "unique dual-class shares" companies, facilitating overseas issuers' secondary listings, optimizing the IPO process, and providing further flexibility for biotech and other specialized technology companies. In the first half of the year, SEHK will implement an improved structured product listing framework and consult the market on the specific implementation plan of a T+1 settlement cycle; there will be reforms in the trading unit system, and in collaboration with the Securities and Futures Commission (SFC) and the industry, a paperless securities market system will be introduced later in the year. Further optimization will also include enhancements to the continuous regulatory framework for listed companies, providing specific guidance for overseas companies' secondary listings, and recognizing more overseas markets as acceptable exchanges. In the bond market, SFC and the Hong Kong Monetary Authority (HKMA) will implement the "Fixed Income and Money Market Development Roadmap" to promote issuance and liquidity, expand offshore Renminbi business, and new-generation infrastructure. To support the development of digital assets and the application of tokenization technology in the bond market, the government will provide guidance on the use of distributed ledger technology for a bondholder registry, explore electronic signing of issuance documents, and promote the electronic transformation of bearer bonds. In terms of regulatory optimization, the Mandatory Provident Fund Schemes Authority (MPFA) will propose streamlining the procedures for recovering outstanding employer contributions. The "Global Full Mobility" of trillions of MPF will be expected to be implemented in the first phase this year, with legislation to be expanded to cover a wider range of employees in the first half of next year; the Insurance Authority (IA) will optimize the risk-based capital regime for insurers, adjust the risk parameters for general insurance business, and reduce capital requirements for infrastructure investments. 2. Expand Infrastructure The government is actively expanding financial infrastructure to lay the foundation for long-term development. The HKMA and SEHK have initiated studies to establish a one-stop multi-asset post-trade infrastructure to cover stocks and bonds in both the Mainland and Hong Kong, promoting collateral connectivity. This infrastructure will connect more regional platforms, such as the Swiss SIX platform, and introduce post-trade services for stock trading for the first time. The aim is to establish a digital asset platform by the end of the year to support the issuance and settlement of digital bonds. The comprehensive fund platform of SEHK will expand its functions to include payment and settlement processes such as fund sales, to enhance market efficiency and reduce transaction costs. 3. Increase Capacity Hong Kong will enhance market capacity and attractiveness through tax and product extension measures. In promoting the internationalization of the Renminbi, the total amount of Renminbi business funds arrangement doubled to RMB 200 billion at the beginning of the month; efforts will be made to facilitate more convenient foreign exchange trading between Renminbi and regional currencies, the government will issue Renminbi bonds regularly to perfect the yield curve, construct an interest rate curve, and attract high-quality and emerging market issuers. The government issued tokenized bonds worth HK$10 billion last quarter and provided tokenized central bank currency settlement. In addition to regular issuances by the government, the HKMA will encourage more digital bond issuances through the "Digital Bond Grant Scheme". In the asset and wealth management sector, Hong Kong will optimize the preferential tax regime for funds and family offices, expand the definition of "funds" to cover specific single investor funds, list digital assets, precious metals, and specific bulk commodities as qualified investments for tax concessions, with legislative proposals to be submitted in the first half of this year and planned to be effective from the 2025/26 tax year. To promote the development of Real Estate Investment Trust (REIT) market, a statutory regime will be introduced to facilitate the privatization or restructuring of REITs, and a stamp duty exemption will be granted for the transfer of non-residential properties by REITs preparing for listing. To enhance the attractiveness of the "Inward Outward" dual platform, additional tax incentives and pre-approval mechanisms for corporate treasury centers will be announced in mid-year. Efforts will also be made to promote the relocation of enterprises, with 22 approvals granted to date and approximately 20 applications being processed. To further attract enterprises to establish in Hong Kong, a preliminary framework has been developed, with policy tools including tax exemptions. The Financial Secretary will chair the establishment of the "Tax Policy Consultative Committee" to promote tax policies that better support economic development. In establishing an international gold trading market, in addition to the various measures already announced, the government will study providing tax incentives for qualified institutions conducting gold trading and settlement in Hong Kong, and establish a training framework for the industry. The government will support discussions with Mainland and international multilateral financial institutions to establish a green technology project accelerator in Hong Kong, to support the incubation, acceleration, and development of green technology projects in the Belt and Road region. Efforts will also be made to facilitate financial institutions to access utility usage data with the consent of enterprises, to enhance the efficiency of green financing and risk assessment. 4. Enhance Connectivity In terms of "Enhancing Connectivity" and international cooperation, the government is actively cooperating with and supporting the Asian Infrastructure Investment Bank (AIIB) in setting up an office in Hong Kong. This year, Hong Kong will host for the first time the APEC Finance Ministers' Meeting, and will continue to host various financial events, including the "WealthTech Hong Kong" Summit and "Hong Kong Fintech Week x StartmeupHK Festival 2026". The ASIA FINANCIAL Forum will celebrate its 20th anniversary next year, focusing on strengthening the elements of financial empowerment in industry development (finance+). Furthermore, Hong Kong has signed 55 comprehensive double taxation avoidance agreements and will continue to expand its agreement network.