Hong Kong First Five-Year Plan Targets Stock and Bond Market Upgrades

Hong Kong published its first five-year plan for economic and social development for 2026-2030 on September 16. Reading the plan at the Legislative Council, Chief Executive John Lee said the city will optimize its stock and bond markets, focusing on the two core markets by continuously improving market institutional design and product ecosystems, deepening market depth, breadth and liquidity, helping mainland enterprises go global and international capital enter the mainland, and serving as the country's testing ground for financial opening.

On improving securities market efficiency, the plan proposes strengthening the competitiveness of the listing regime and raising the operational efficiency of securities market infrastructure, and supporting mainland and overseas industry leaders and quality emerging-industry enterprises to list in Hong Kong. This includes deepening cooperation between Hong Kong Exchanges and Clearing and the Qianhai Equity Exchange to help more quality mainland enterprises access international capital markets through Hong Kong's listing platform and build smoother, more efficient listing services. The plan also calls for improving and expanding financial market connectivity mechanisms, expanding into emerging areas, leveraging the investment and financing platform function, and advancing economic, trade, financial and infrastructure cooperation with Belt and Road partner countries and emerging economies in the Global South.

On optimizing the international bond market, the plan proposes coordinated progress in primary market issuance, secondary market liquidity, offshore renminbi business expansion, and fixed income and currency infrastructure. It calls for improving Bond Connect Southbound and continuing to optimize and expand the Southbound scheme in terms of investment scale, investor scope, products and trading arrangements. It seeks to encourage more mainland institutions to invest in Hong Kong's bond market and to expand the channels and business volumes of Stock Connect, Bond Connect, Wealth Management Connect and Private Equity Connect. It also proposes developing diversified financial products and risk management tools, and studying the establishment of central counterparty clearing for repo transactions and improving over-the-counter derivatives regulation.

The plan also proposes steadily advancing regular issuance of government digital bonds, improving related legal and market supporting arrangements, promoting the popularization of digital bonds, and accelerating the commercialization, internationalization and modernization of the Central Moneymarkets Unit (CMU). It calls for connecting local central securities depository platforms for stocks and bonds, building an electronic trading platform for fixed income and currency products suited to Hong Kong's market characteristics and renminbi internationalization needs, and developing the CMU into a leading central securities depository in the region.

On financial institutions and talent, the plan proposes attracting international financial institutions to set up regional headquarters or offices in Hong Kong and supporting financial institutions in using Hong Kong as a regional base. It supports multilateral development institutions such as the Asian Infrastructure Investment Bank in using Hong Kong's mature capital markets for project financing, bond issuance, investment and financial management, and in actively cooperating with and supporting the needs of the AIIB office established in Hong Kong. It also calls for strengthening the training and recruitment of international financial talent, improving professional qualification alignment, practical training and cross-border exchange mechanisms, and building a financial talent pool with international vision and professional capabilities.

The plan proposes strengthening financial institution development and international financial participation and cooperation, and deeply participating in regional and global financial development. It supports large mainland financial institutions in using Hong Kong's platform to improve comprehensive service levels, helping mainland financial institutions increase capital investment in Hong Kong and develop overseas business with Hong Kong as their international headquarters. It calls for leveraging the role of Hong Kong offices of large mainland financial institutions as group risk management centers and operating bases, supporting mainland banks and insurance companies, especially international reinsurance companies, in exploring international markets, and giving play to the role of Hong Kong offices of other mainland financial institutions as windows for internationalized operations and as transit stations for Chinese enterprises going global. It also calls for hosting high-level financial events and deepening international exchange and practical cooperation.

In addition, the plan proposes facilitating company re-domiciliation to Hong Kong, orderly guiding overseas enterprises with sound capital, governance and substantive operations, especially financial institutions, to re-domicile in Hong Kong, and enhancing the quality and stability of financial entities in the city.