Hong Kong SAR Chief Executive delivers the 2026 Policy Address: HKEX to launch an "offshore RMB bond index" (full text attached)

On September 16, John Lee Ka-chiu, Chief Executive of the Hong Kong Special Administrative Region, delivered the "Chief Executive's 2026 Policy Address" and the first "Five-Year Plan." In the Policy Address, John Lee Ka-chiu pointed out that Hong Kong will consolidate and enhance its status as an international financial center and adhere to its international positioning. Hong Kong will deepen its global offshore RMB business and capital market, build an international asset and wealth management center and an international risk management center, optimize the securities market, and expand the fixed income and commodities trading ecosystem. At the same time, it will empower the upgrading of the real economy with green, digital, and innovative development, deepen internal and external connectivity, and consolidate its position as a global hub for fund flows. John Lee Ka-chiu also mentioned that Hong Kong Exchanges and Clearing Limited (HKEX) will launch the "HKEX Offshore RMB Bond Index" as a reference for market trends and an underlying benchmark for exchange-traded funds (ETFs). In the Policy Address, John Lee Ka-chiu stated that the stock market system will be further improved. The Securities and Futures Commission (SFC) and HKEX launched the second phase of consultation in the third quarter of this year on enhancing the competitiveness of the listing regime, optimizing rules on notifiable transactions, connected transactions, and spin-offs, lowering compliance costs, and increasing the flexibility of listed companies for mergers and acquisitions, restructuring, and business spin-offs. Liquidity in HKEX's Hong Kong stock technology sector has accounted for more than 40% of the overall market. HKEX will launch a consultation in the first half of next year on revising the listing regime for specialist technology companies, including a review of market capitalization thresholds. The government will step up support for local start-ups. The "Innovation and Technology Industry Guidance Fund" is expected to be officially launched within this year. About 20 fund manager companies have initially been shortlisted, and fundraising is underway to establish sub-funds. An additional HK$1 billion has been reserved for the "Innovation and Technology Venture Fund" optimization plan to select more fund manager companies to participate. Funding programs under the Innovation and Technology Fund related to advancing new industrialization have been consolidated into the "New Industrialization Support Scheme" to focus more on promoting the commercialization of research outcomes and new industrialization. Reviews of other funding consolidations will continue. Build an innovation and technology financial ecosystem with "patient capital." Hong Kong Investment Corporation Limited (HKIC) has so far secured more than 200 investment projects, covering hard technology, life and health technology, new energy, and green technology, among which 11 companies have already listed in Hong Kong, and more than 30 others have applied or plan to apply for listing in Hong Kong in 2026. In addition, about 70% have launched or are expanding overseas business. HKIC will continue to attract international long-term capital to co-invest. In the Policy Address, John Lee Ka-chiu mentioned building a Northern Metropolis that is livable, workable, and visitable. All nine new development areas in the Northern Metropolis have been set in motion. The Northern Metropolis has entered a stage of full-speed construction. Up to the 2025-26 fiscal year, about 120 hectares of "spade-ready sites" have been produced cumulatively, and in the 2026-27 and 2027-28 fiscal years, efforts will be made to produce no less than 200 hectares of "spade-ready sites" in total. Among the nine new development areas in the Northern Metropolis, four (including Kwu Tung North/Fanling North, Hung Shui Kiu/Ha Tsuen, Yuen Long South, and San Tin Technopole and the Loop) have commenced construction, involving about 800 hectares of land. Land formation and infrastructure works for the fifth new development area (Ngau Tam Mei) will commence in the first half of next year, with spade-ready sites to be produced progressively from the end of 2028. As for the remaining four new development areas, we will launch the statutory planning and related procedures for the Lau Fau Shan New Development Area this year, and next year will progressively launch statutory planning and related procedures for more than 200 hectares of priority development areas in the Ta Kwu Ling New Development Area (including some university town sites), the Au Tau New Development Area, and part of the Ma Tso Lung New Development Area. The full text of the report is as follows: Chapter 1 Formulating the First Five-Year Plan Hong Kong Opens a New Chapter I. Four-Year Review 1. The current-term government has been in office for four years. Looking back on these four years, Hong Kong's economy has turned from negative growth of 3.7% to positive growth of 3.6% last year, and in the first half of this year it grew by 5.1% year on year, the strongest half-year performance in nearly five years; goods exports also grew by more than 26% year on year; gross domestic product exceeded HK$33,000 billion in 2025. The number of local and overseas company registrations both hit record highs, and total initial public offering (IPO) fundraising ranked among the top in the world. The median monthly employment income of residents rose by about 20% cumulatively over four years. Hong Kong's achievements have gained international recognition. Hong Kong has retained its top spot as the world's freest economy, jumped to first in the world as a cross-border wealth management center, risen to third globally as an international financial center, risen to second globally in world competitiveness, climbed ten places to fourth globally in talent competitiveness, ranked third globally in education competitiveness, and five Hong Kong universities have entered the world's top 100. 2. Over the four years, the government has focused on resolving long-standing "hard nut" issues accumulated over many years, including legislating to regulate ride-hailing services, filling a long-standing legal gap; implementing three-tunnel diversion to improve long-standing congestion in cross-harbour tunnels; enacting the "Basic Housing Units Ordinance" to phase out substandard "subdivided flats" in residential buildings in an orderly manner; launching "Light Public Housing"; shortening the overall public rental housing waiting time from 6.1 years by 1.3 years to 4.8 years, remaining at the lowest level in more than eight years for two consecutive quarters; cracking down on abuse of public rental housing and recovering more than 10,000 units, equivalent to two large estates, so that residents can move in sooner. 3. We have fully implemented the principle of "patriots administering Hong Kong" and strengthened the interactive relationship between the executive and the legislature; improved district governance and established District Services and Community Care Teams (Care Teams), which have visited more than 600,000 elderly households and households in need, strengthening district support work. 4. We have reformed the drug and medical device approval system, established "Tier 1 approval," and prepared to set up a medical device regulatory center so that residents can obtain more advanced treatment more quickly; advanced primary healthcare development and strengthened chronic disease management so that residents can prevent and treat diseases early; optimized the Elderly Health Care Voucher, introduced a reward scheme, allowed spouses to share it, and extended its scope of use to the Guangdong-Hong Kong-Macao Greater Bay Area (Greater Bay Area); improved public healthcare manpower, introduced talent, and implemented preparations for establishing a third medical school; and the Hong Kong Chinese Medicine Hospital has commenced service. 5. We have implemented the abolition of the Mandatory Provident Fund (Trillions of MPF) "offsetting" arrangement; changed the statutory minimum wage from a "two-yearly review" to an "annual review"; and optimized the continuous contract working hours threshold from the so-called "418" to "468," giving more workers better protection. 6. Guangdong, Hong Kong, and Macao successfully co-hosted the National Games for the first time, and Kai Tak Sports Park has also grandly opened, quickly becoming one of the most popular venues in the world, comprehensively enhancing Hong Kong's capacity and attractiveness for hosting major sports events and concerts and promoting the vigorous development of the mega-events economy. 7. I have "taken results as the goal," changed the government culture, and established a whole-of-government mobilization mechanism, which has been activated in aftermath work after extreme weather and major drills, effectively enhancing the government's overall preparedness and response capacity. 8. The government stopped the violence and restored social order, handled key cases endangering national security in accordance with the law, completed local legislation for Article 23 of the Basic Law, honorably fulfilled a constitutional responsibility awaited for more than 26 years, and established a complete and effective barrier for safeguarding national security. Hong Kong's barrier for safeguarding national security has been further consolidated, maintaining Hong Kong's prosperity and stability and creating a more stable and predictable business and development environment for Hong Kong. II. Hong Kong's First Five-Year Plan 9. The country formulates five-year plans, and through one five-year period after another of sustained struggle, social development, and improvement of people's livelihood, it has achieved major accomplishments that have attracted worldwide attention. 10. This year is the opening year of the country's "15th Five-Year Plan." The SAR government has formulated Hong Kong's first five-year plan to proactively align with the national "15th Five-Year Plan," ensuring that Hong Kong better grasps development opportunities and better integrates into and serves the overall national development. In the face of the accelerated evolution of profound changes unseen in a century, the country's strong strength, super-large market, and the powerful momentum brought by high-quality development are Hong Kong's greatest opportunities. We will better develop the economy, improve people's livelihood, enhance residents' well-being, and open a better new chapter for Hong Kong. 11. The five-year plan is the blueprint for Hong Kong's economic and social development over the next five years and is a forward-looking, strategic, and directional guiding document; the Policy Address is the annual report implementing the five-year plan and the Chief Executive's annual policy priorities in response to actual circumstances. The two are closely linked and mutually consistent. 12. The five-year plan is an economic and livelihood blueprint; the Policy Address adjusts annual arrangements in response to the international environment, economic expectations, and dynamics, sets work targets, implements the blueprint, and sets out annual policy priorities, major projects, and infrastructure projects. 13. In advancing implementation of the five-year plan over the coming year, the government will take the Policy Address's key policies and major projects as the, through resource allocation in the Budget, cross-departmental coordination, and regular progress reviews, to promote the orderly implementation of various targets. Chapter 2 Fully and Accurately, Unswervingly Implement the "One Country, Two Systems" Principle I. Fully and Accurately Implement "One Country, Two Systems" 14. "One Country, Two Systems" is the cornerstone of Hong Kong's long-term prosperity and stability and must be upheld over the long term. We will continue to fully and accurately and unswervingly implement the principles of "One Country, Two Systems," "Hong Kong people administering Hong Kong," and a high degree of autonomy. Practice has proven that by upholding the foundation of "One Country" and making good use of the benefits of "Two Systems," Hong Kong can better leverage its strengths, grasp national development opportunities, and ensure that the practice of "One Country, Two Systems" advances steadily and sustainably. II. Safeguarding National Security 15. Safeguarding national sovereignty, security, and development interests is the highest principle of the "One Country, Two Systems" principle. As profound changes unseen in a century accelerate, risks and challenges are complex and intertwined, and we must establish bottom-line thinking and prevent and defuse hidden risks. Safeguarding national security is always ongoing and never completed; it is a long-term task of the SAR. 16. With the successive implementation of the Hong Kong National Security Law and the Safeguarding National Security Ordinance, the security of the country and Hong Kong has been better protected. We will continue to improve the legal system and enforcement mechanisms for safeguarding national security and uphold the unity of the central government's fundamental responsibility for safeguarding national security and the SAR's constitutional responsibility. 17. We adhere to coordinating development and security. In promoting development, security must never be neglected. We must escort high-quality development with high-level security and then safeguard high-level security with high-quality development. 18. Hong Kong's practice of safeguarding national security has injected strong stability, certainty, and predictability into the market. Hong Kong is a "safe harbor," and a "safe harbor" is a "development harbor." Security has become an advantage for Hong Kong's development. 19. Respecting and complying with national security laws is not only a responsibility but also the duty of every resident. The SAR government will make national security publicity and education work deeper and broader. As Hong Kong's first physical national security education base, the National Security Exhibition Gallery has received more than 1.9 million visitors since opening in August 2024. The government will expand the National Security Exhibition Gallery and enrich its content to promote the concept that "a secure country makes a good home." III. Uphold and Improve Executive-Led Governance 20. The SAR government upholds executive-led governance, takes on principal responsibility, gives play to its functions of overall coordination, coordination, and promotion, improves working mechanisms, and advances various affairs with pragmatic and effective measures, safeguarding social stability, supporting high-quality economic development, and enhancing residents' well-being. 21. Under the principle of executive-led governance, the executive and legislative organs both check and balance each other and cooperate with each other. The executive and legislature concentrate their efforts on jointly solving social problems, developing the economy, and improving people's livelihood. IV. Implement the Principle of "Patriots Administering Hong Kong" 22. Since the improvement of the SAR electoral system in 2021 and the improvement of the district governance system in 2023, the principle of "patriots administering Hong Kong" has been fully implemented, providing a solid institutional guarantee for the steady and sustained practice of "One Country, Two Systems." 23. The SAR will fully prepare for the ordinary elections for the Election Committee subsectors to be held on November 22 this year, as well as the Chief Executive election and District Council ordinary elections to be held next year, ensuring that elections are fair, just, honest, and conducted safely and orderly. 24. Strengthen patriotic and pro-Hong Kong forces, with particular emphasis on nurturing young people, broadly unite patriots and pro-Hong Kong people from all sectors of society, expand the coverage of patriotic and pro-Hong Kong ranks by establishing communication platforms, and work together to overcome development challenges. V. Promote Patriotic Education Cultivate National Sentiment 25. To align with the strategic deployment in the "15th Five-Year Plan" to "implement the project of fostering virtue through education in the new era" and to promote students' sense of national identity and cultural confidence, we will extend the activities of the Constitution and Basic Law Student Campus Ambassadors Training Scheme to all publicly funded primary and secondary schools; in conjunction with the updated "Hong Kong National Security Education Curriculum Framework," add a new online national security education platform; and provide more learning and teaching resources related to national geography and teacher training courses. 26. We will deepen youth patriotic education, make good use of mainland resources to promote diverse and rich exchange and internship activities, and set annual themes, such as national aerospace achievements and the Dongjiang water supply project to Hong Kong, so that young people can personally experience national development achievements and deepen their understanding of the country's history and culture and the relationship between the motherland and Hong Kong of "sharing weal and woe and being linked by blood." Promote Hometown Culture 27. Since the "Hometown Culture Promotion Scheme" was launched in 2024, it has provided HK$10 million in funding each year to organize activities promoting hometown culture, and so far hometown associations have applied to hold more than 100 activities. From the 2027 28 fiscal year, the government will continue to reserve HK$10 million each year to support hometown associations in holding more activities, especially to strengthen young people's understanding of and sense of belonging to their hometowns. Enrich Patriotic Education Resources 28. This year marks the 90th anniversary of the victory of the Long March. Yan'an is a sacred site of the Chinese revolution and the cradle of New China. With the support of the central government, we will designate the Yan'an Revolutionary Memorial Hall in Shaanxi Province as the second Hong Kong SAR youth patriotic education base on the mainland, encourage students and young people to visit and study there, and continue to communicate and consult with relevant mainland authorities to include more patriotic education facilities and continuously enrich Hong Kong's patriotic education resources. Establish a Museum to Introduce National Development and Achievements 29. The Leisure and Cultural Services Department (LCSD) is coordinating with the National Museum of China, the Museum of the Communist Party of China, and others to plan the establishment of a museum in Kwu Tung North to introduce national development and achievements, showcasing the country's rapid development and brilliant achievements in science and technology, sports, and culture, highlighting Hong Kong's role in participating in national development and the unique advantages of "One Country, Two Systems." Promote Chinese Culture 30. Since its establishment in April 2024, the Chinese Culture Promotion Office has held many popular exhibitions, and the "Chinese Culture Festival" and "Chinese History Series Exhibitions" have developed into flagship brand projects. We will continue to launch high-quality projects under the "Chinese Culture Festival" that showcase China's excellent traditional culture and tell China's story well to the world.Chapter 3 Strengthen the Four Major Centers and the Development of a Talent Hub I. International Financial Center 31. We will consolidate and enhance Hong Kong's status as an international financial center and adhere to its international positioning. Hong Kong will deepen its global offshore RMB business and capital market, build an international asset and wealth management center and an international risk management center, optimize the securities market, and expand the fixed income and commodities trading ecosystem. At the same time, it will empower the upgrading of the real economy with green, digital, and innovative development, deepen internal and external connectivity, and consolidate its position as a global hub for fund flows. Global Offshore RMB Business Hub 32. Hong Kong's offshore RMB loans reached a record high of RMB935 billion in 2025, and bond issuance has reached RMB1 trillion for two consecutive years, consolidating its position as a global offshore RMB business hub. 33. We will fully deepen market development: Increase Liquidity (i) The RMB Business Facility launched in 2025 provides banks with stable, lower-cost RMB funds, promotes expanded RMB use in the real economy, and radiates to ASEAN, the Middle East, Europe, and other places. The quota has been expanded to RMB500 billion, and the loan tenor has been extended to three years. The Hong Kong Monetary Authority (HKMA) is discussing with the People's Bank of China the optimization of the currency swap agreement arrangement to enhance liquidity protection in the offshore RMB market and consolidate Hong Kong's position as a global offshore RMB hub. (ii) The HKMA will launch a seven-day offshore RMB liquidity bidding mechanism to broaden banks' short-term funding channels, and study the issuance of short-term offshore RMB debt instruments to provide the market with more high-quality investment and liquidity management products and improve the offshore RMB interest rate curve. Expand the Dim Sum Bond Market (iii) Increase dim sum bond issuance in a timely manner and optimize the tenor structure; seek an increase in the scale and frequency of bond issuance in Hong Kong by the Ministry of Finance and encourage policy-based financial institutions to issue bonds in Hong Kong. (iv) Hong Kong Exchanges and Clearing Limited (HKEX) will launch the "HKEX Offshore RMB Bond Index" as a reference for market trends and an underlying benchmark for exchange-traded funds (ETFs). Diversify Products (v) The HKMA will explore extending the product scope of "Bond Connect" (Southbound Trading) to HKD bonds and RMB bond-related products. (vi) The Securities and Futures Commission (SFC) is preparing to include RMB counters in Stock Connect, and HKEX will also encourage listed companies to add RMB counters. Enrich Risk Management Tools and Asset Uses (vii) With the official launch of Treasury bond futures, the SFC will support HKEX in enriching currency futures products for RMB against other currencies. (viii) Under the "Bond Connect" mechanism, the acceptance of Northbound Trading bonds as collateral will be expanded to the three clearing houses under HKEX, and Southbound Trading bonds will also be included in repo arrangements, activating domestic and overseas investors' assets. Deepen External Cooperation and Promotion (ix) The HKMA, the People's Bank of China, and Bank Indonesia are expected to launch an offshore RMB-Indonesian rupiah bilateral currency transaction framework within the year; the HKMA will expand direct exchange arrangements between offshore RMB and other currencies. (x) The HKMA will promote more foreign-funded banks in Hong Kong to directly join the Cross-border Interbank Payment System (CIPS) to expand the clearing network; deepen cooperation with central banks in ASEAN and the Middle East, strengthen ties with Central Asia, Latin America, and other regions, and jointly visit Indonesia with the Hong Kong Association of Banks to promote Hong Kong's offshore RMB service advantages. Develop New Growth Points in the Fixed Income Market 34. Hong Kong is the largest center for arranging international bond issuance by Asian institutions, accounting for about one quarter of global issuance arranged through Hong Kong in 2025. We will further consolidate Hong Kong's position as an international fixed income center: (i) The SFC will improve the regulatory framework of the fixed income market and formulate international-aligned codes of conduct for issuance and trading. (ii) Bond Connect Company Limited, a joint venture between China Foreign Exchange Trade System and HKEX, will establish an electronic fixed income and currency trading platform in Hong Kong. The platform will first develop bond trading and gradually expand to currency and foreign exchange trading. (iii) The SFC will promote HKEX to add a new reference rate for "Swap Connect" in the fourth quarter of this year to reflect interbank funding costs in the mainland, facilitate international investors in managing RMB interest rate risk, and explore the launch of a centralized clearing mechanism for bond repos to enhance market liquidity. 35. From 2025 to the first half of 2026, the scale of digital bonds issued in Hong Kong remained in a leading position, accounting for about 50% of the global share. The government will focus on expanding scenarios and promoting adoption: (i) Regularly issue digital bonds to promote innovation, including applying different digital currency settlements and exploring their use across the full life cycle of digital bonds (such as interest payments and redemption). (ii) The HKMA will pilot tokenized operation of Exchange Fund bills before the end of the year to help banks further leverage the advantages of tokenization technology and efficiently use more than HK$1,300 billion of Exchange Fund bills around the clock, improving asset-liability management efficiency. (iii) The HKMA's "Tokenized Bond Expert Group" will explore innovative solutions and, together with the Financial Services and the Treasury Bureau (FSTB), carry out the second phase of the legal framework review to promote the application of distributed ledger technology (DLT) in the capital market. (iv) CMU OmniClear Limited (CMU OmniClear) will establish a digital asset platform within this year to provide one-stop services such as digital bond issuance and settlement. Optimize the Securities Market 36. The local stock market has performed strongly. As of the end of August this year, IPO fundraising exceeded HK$340 billion, surpassing the full-year scale of last year. To further improve the stock market system: (i) The SFC will launch a consultation in 2027 on streamlining prospectus disclosure requirements to facilitate listings in Hong Kong by high-quality overseas enterprises. (ii) The SFC and HKEX will promote dual primary listings and secondary listings in Hong Kong by overseas enterprises from Southeast Asia and Belt and Road countries, and advance the inclusion of qualified exchanges in Kazakhstan in the list of recognized stock exchanges. (iii) The SFC and HKEX launched the second phase of consultation in the third quarter of this year on enhancing the competitiveness of the listing regime, optimizing rules on notifiable transactions, connected transactions, and spin-offs, lowering compliance costs, and increasing the flexibility of listed companies for mergers and acquisitions, restructuring, and business spin-offs. (iv) Liquidity in HKEX's Hong Kong stock technology sector has accounted for more than 40% of the overall market. HKEX will launch a consultation in the first half of next year on revising the listing regime for specialist technology companies, including a review of market capitalization thresholds. (v) HKEX is working with the market on preparations and will launch a "T+1" settlement cycle for the cash market after coordinating with relevant mainland units; at the same time, together with the HKMA, it will introduce wholesale-level central bank digital currency (i.e., "e-HKD" payment solution) for after-hours derivatives trading, with the target of conducting real transactions within this year. 37. We will deepen cross-product and cross-market integration and liquidity in the capital market: (i) The Central Moneymarkets Unit (CMU) operated by CMU OmniClear will launch global securities services in phases; and strengthen connections with markets in Europe, the United States, the Middle East, Central Asia, and ASEAN to facilitate investors' global asset allocation through the CMU. (ii) The HKMA and HKEX will advance the interconnection between CMU OmniClear and the Depository and Nominee System (DNS), promote institutional and technological breakthroughs, explore the establishment of a unified management framework for bond and stock assets, and unlock cross-asset synergy potential. 38. The government will build a multi-tiered financial derivatives system, strengthen risk management and price discovery functions, and comprehensively enhance market allocation efficiency: (i) HKEX will support the industry in enriching thematic stock indices, developing diversified bond indices, exploring commodity indices, and launching more index ETFs and derivative products to build a financial index ecosystem. (ii) HKEX's Derivatives Market Consultative Panel will study further enriching the derivatives ecosystem, including launching more short-dated stock options, thematic futures and options, and more. 39. The SFC will promote and support HKEX in continuously enhancing market liquidity and increasing funding flexibility: (i) Optimize cross-clearing house margin arrangements, consolidate assessment of participants' offsetting position risks across different markets, reduce costs, and improve efficiency. (ii) Expand the types of accepted non-cash collateral and lower related fees. International Asset and Wealth Management Center 40. Hong Kong jumped to become the world's largest cross-border wealth management center this year. We will continue to build a more attractive asset and wealth management ecosystem, including strengthening promotion after the legislative amendments to optimize the preferential tax regimes for funds, single-family offices, and carried interest are passed by the Legislative Council, attracting funds and family offices to establish a presence in Hong Kong and more global capital to be managed in Hong Kong, and promoting product innovation and market upgrading: (i) Submit within 2026 a legislative amendment bill to facilitate the privatization or restructuring of real estate investment trusts (REITs); and submit in the first half of 2027 a legislative amendment bill to waive stamp duty on transfers of non-residential properties for REITs preparing for listing. (ii) The SFC will streamline procedures to attract high-quality overseas REITs to dual-list in Hong Kong, and revise the code in the fourth quarter of 2026 to promote fund product innovation and broaden investor choice. (iii) Continue to strive for the early implementation of including REITs in mutual market access. 41. At the same time, continue to attract diversified capital to allocate high-quality assets in Hong Kong: (i) Promote mainland insurance funds to invest in Hong Kong ETFs through mutual market access, and expand the scope of eligible products under ETF Connect. Promote cross-listing of ETFs between HKEX and Southeast Asian exchanges. (ii) Remove restrictions such as the total investment cap for Trillions of MPF funds investing in qualified index-tracking ETFs, and promote Trillions of MPF funds' greater use of local high-quality ETFs. International Risk Management Center 42. Hong Kong will further improve the insurance regulatory regime, build a multi-tiered risk management system, and create a top-tier risk management center in Asia, using financial security to safeguard the development of the real economy. Strengthen the International Reinsurance Hub 43. The Insurance Authority (IA) is actively developing reinsurance and captive insurance business and strengthening the synergy between the capital market and the insurance industry to build an international risk transfer platform: (i) Three captive insurers have been authorized this year, bringing the total to nine, helping enterprises build comprehensive global risk management capabilities. (ii) Continue to promote insurance-linked securities (ILS), narrow the catastrophe risk protection gap, and review investor restrictions to activate the ILS fund trading market. (iii) Study legislative amendments to introduce protected cell companies (PCCs) to lower the cost of setting up captive insurers and issuing ILS. Develop Specialized Insurance to Meet the Needs of Emerging Industries 44. The development of emerging industries will create substantial demand for new types of specialized insurance. The government and the IA will appropriately enhance the industry's underwriting capacity, covering gold storage, commodities trading, green fuel bunkering, and more. Build a Commodities Trading Ecosystem Accelerate the Establishment of an International Gold Trading Market 45. The government will seize the strong development momentum of the gold market and strengthen development: (i) Officially launch the Hong Kong Gold Central Clearing and Settlement System in the first quarter of 2027. (ii) HKEX will announce within this year details of a new RMB-denominated and physically settled gold futures contract to enhance RMB's international influence in precious metals pricing. (iii) The Mandatory Provident Fund Schemes Authority optimized the approval regime for gold ETFs in July this year to enhance the flexibility of Trillions of MPF funds investing in gold ETFs. (iv) The SFC will optimize the regulatory regime for over-the-counter derivatives to facilitate risk and treasury management for gold and other commodities trading. (v) The IA will strengthen coordination with the industry on insurance arrangements for precious metals and set up a valuables insurance hotline to help policyholders connect with insurers. (vi) The HKMA is studying a moderate increase in gold holdings by the Exchange Fund and participation in Hong Kong's spot and futures markets, and will gradually transfer existing gold stock to warehouses designated by the Hong Kong Gold Settlement Company. (vii) The government will set up a "Gold Express" to provide one-stop assistance to domestic and overseas gold merchants participating in Hong Kong's gold trading ecosystem, and at the same time promote the industry to establish a gold industry association and hold a flagship event in 2027. (viii) Cooperate with the Financial Services Development Council (FSDC) to launch gold trading-related courses introducing the full-chain development and supporting facilities operations. Expand the International Metals Trading and Delivery Network 46. Since the London Metal Exchange (LME) included Hong Kong in its global warehouse network in 2025, warehouse area has so far exceeded 60,000 square meters, storing more than 20,000 metric tons of metals. We will accelerate the building of a safe, efficient, and internationally influential commodities trading hub: (i) Implement the half-rate profits tax concession for physical commodities trading to attract more commodities traders to establish or expand business in Hong Kong; study providing tax concessions for qualifying activities in the gold and commodities trading ecosystem, and put forward proposals for consultation with the Legislative Council next year. (ii) Promote operators to set up more LME-approved warehouses in the Northern Metropolis (Northern Metropolis) to cluster physical delivery, financing, and risk management services. (iii) HKEX plans to launch the "LME Shanghai Hot-Rolled Coil Contract" on the LME in October this year to expand international application scenarios for mainland prices and enhance the international influence of Chinese futures. (iv) HKEX will strive to launch a tokenized warehouse receipt financing pilot project with designated banks within 2027, using physical tracking technology to help enterprises obtain working capital by using commodity inventories as collateral. (v) HKEX is establishing a blockchain-supported multi-asset tokenization platform, which has included carbon credits listed on Core Climate, and next year will include commodity warehouse receipts from LME-approved warehouses as a pilot to facilitate flexible collateral allocation and cross-collateralization by the market. (vi) Hong Kong Customs will study how to provide customs clearance facilitation for commodities. (vii) Encourage the International Organization for Mediation to explore the establishment of a dedicated roster of mediators for commodities trading to reduce cross-border transaction risks and attract more international traders and financial institutions to use Hong Kong as a trading and settlement base. 47. The government will establish a "Commodities Trading Joint Working Group" led by the Secretary for Financial Services and the Treasury, together with relevant financial regulators, to comprehensively review market opportunities and cross-exchange cooperation opportunities. Green and Sustainable Finance Development 48. In 2025, green and sustainable bonds arranged in Hong Kong accounted for about 40% of Asia's total, and the Ministry of Finance also arranged the issuance of RMB green sovereign bonds in Hong Kong for the first time in 2026. To further improve the sustainable finance ecosystem: (i) Implement full adoption of the International Financial Reporting Sustainability Disclosure Standards (ISSB Standards) by large public interest entities before 2028 to enhance market disclosure quality. (ii) HKEX will launch a "Green Equity Certification Scheme" to enhance market recognition of qualified green securities issuers, and the HKMA will launch new pilot application scenarios for the Hong Kong Taxonomy for Sustainable Finance. (iii) HKEX Core Climate and the Hong Kong Quality Assurance Agency will explore Hong Kong's participation in cross-border carbon trading to help the country build a more internationally influential carbon market. (iv) Continue to hold "Hong Kong Green Week" to promote Hong Kong's leading position as a sustainable finance hub. Promote Fintech Innovation 49. The SFC will promote fintech to empower industry upgrading: (i) Improve the virtual asset licensing regime and formulate specific regulatory guidelines to clarify compliance pathways for virtual asset service providers. (ii) Improve the regulatory framework for tokenized investment products, promote the issuance and trading of tokenized products for gold and other suitable real-world assets on licensed platforms, and the launch of innovative products. (iii) Promote the trading of regulated stablecoins on licensed virtual asset trading platforms and the settlement of tokenized money market funds to enhance Hong Kong's competitiveness as an international digital asset hub. 50. The HKMA plans to complete EnsembleTX's central bank digital currency (CBDC) settlement and 24/7 operation arrangements around the end of this year, and explore more tokenized deposit applications. Coordinate the Management and Control of New Financial Risks 51. Under the principle of prudently managing risks, we will strive to improve the efficiency and security of fintech in serving the real economy: (i) Study optimizing the legal framework and promote industries such as technology and telecommunications to strengthen detection and removal of content involving fraud (including abuse of artificial intelligence (AI)-generated content), with the target of conducting public consultation on proposed legal framework by the end of this year; the HKMA will study using AI technology to analyze payment data to enhance banks' ability to detect suspicious transactions. The HKMA is promoting banks and stored value payment facilities to use "iAM Smart" multi-factor authentication, and the first phase of testing for remote account opening has begun. (ii) Future quantum computing can enhance financial services and also requires simultaneous upgrading of cryptographic technology. The HKMA has launched a "Quantum Preparedness Index" to guide the industry to deploy early and is cooperating with research institutions to steadily advance applications. (iii) The SFC will commence operation of the digital asset custody monitoring system in the second half of this year and launch the big data market surveillance and anti-money laundering surveillance components of the CrypTech project in 2027. 52. In addition, the FSTB will consult the public within 2026 on legislative proposals to enhance the transparency of beneficial ownership of companies and express trusts, implementing the latest international standards on combating money laundering and terrorist financing. II. International Shipping Center and Aviation Hub International Shipping Center 53. Hong Kong is the country's only international shipping center with separate customs territory status, and its comprehensive maritime strength has ranked fourth globally for seven consecutive years. We will promote the transformation and upgrading from a "large tonnage port" to a "value port," combining the advantages of high value-added maritime services to build Hong Kong into a "global shipping capital." Build a Green Bunkering and Trading Center 54. We will ensure stable supply, add facilities, and promote trading for green shipping energy: (i) Announce within this year the first "green energy corridor" built with mainland cities, and in the future form a "green energy corridor" network centered on Hong Kong, with mainland cities supplying green marine fuels for bunkering or trading in Hong Kong. (ii) Launch planning applications and other statutory procedures for green marine fuel storage facilities in Tsing Yi South next year, conduct tendering in early 2028, and facilitate the industry in building new storage facilities and converting existing oil depots. (iii) Support the industry in carrying out preliminary research on building a green marine fuel trading platform and strengthen promotion. (iv) Cooperate with local universities to provide a clear and transparent carbon emission calculation framework for green marine fuel bunkering and trading. Strengthen the High Value-Added Maritime Services Ecosystem 55. The government has submitted a legislative amendment bill to the Legislative Council to optimize the tax concession regime for maritime services and introduce a half-rate profits tax concession for physical commodities trading, further promoting the development of Hong Kong's high value-added maritime services industry. 56. We will reform Hong Kong's ship registration regime, including introducing a "dual flag ship system" arrangement to increase flexibility and align with the diversified commercial operating models of the international shipping industry. Develop "Finance + Shipping" 57. Hong Kong will rely on its mature maritime finance, insurance, and common law maritime arbitration advantages to build an integrated ecosystem of "Hong Kong capital, Hong Kong law, Hong Kong insurance, and Hong Kong arbitration," providing comprehensive solutions integrating ship financing, contract governance, risk management, and dispute resolution, and enhancing international influence. To promote high-quality coordinated development of the financial center and shipping center, we will join with the Hong Kong Maritime and Port Development Board and the industry to explore feasible solutions for financial linkage with shipping, with focused research on the two major areas of marine insurance and ship financing. 58. The IA will promote expanding the underwriting capacity of the industry's "marine specialized risk pool" to better manage risks. With the support of the China Shipowners Mutual Assurance Association and the assistance of the government and the IA, the Hong Kong Shipowners Mutual Assurance Association will conduct international business in Hong Kong. 59. The number of maritime arbitration cases in Hong Kong has been rising in recent years. The government will continue to actively promote Hong Kong's maritime arbitration services. Promote Green Smart Port Construction and Green Corridors 60. The government will join with terminal operators to formulate a roadmap for the intelligent and green development of the Kwai Tsing Container Terminals, including introducing more autonomous electric vehicles, expanding the application of remote-controlled cranes, and supporting operators in developing shore power facilities, including studying the provision of port fee concessions to attract international liner services. 61. We will announce within this year the