Hong Kong’s strengths in finance are broad-based and span across various areas, making the city rank 3rd globally and 1st in the Asia Pacific in the Global Financial Centers Index.
Hong Kong (HK) is an international banking center, with over 70 of the largest 100 banks in the world having a presence and 15 out of 29 globally systematically important banks (G-SIBs) having their regional headquarters in HK.
Total banking deposits rose by 7.1% during 2024, indicating continuous money inflow. Total assets of banks stand at US$3.6 trillion equivalent to nine times our 2024 GDP. The banking sector continues to demonstrate good health supported by robots capital and liquidity buffers:
- Capital adequacy ratio ( end-2024): 21.8%
- Liquidity coverage ratio ( end- 2024) : 178.4 %
According to the Hong Kong Monetary Authority, HK has extraordinary financial strength, with the government having zero net external debt and fiscal reserves of US $86.5 billion as of January 2025, or 23% of 2024 GDP. In May, rating agencies affirmed HK’s credit rating at AA+ (S&P) and Aa3 (Moody’s). S&P also affirmed HK’s stable outlook, whilst Moody’s upgraded the outlook to stable.
The HK dollar exchange rate remains stable within the zone of 7.75 to 7.85 per US dollar under the Linked Exchange Rate System, backed by US$416 billion of foreign reserves as at end of February 2025, which is 1.6 times our monetary base.
Asia’s International Asset and Wealth Management Hub
Global #1 for investment environment in the Legatum Prosperity Index 2023. #1 in Asia in cross-border private wealth management: US$2.4 trillion cross-border wealth booked in HK as of 2023 (BCG Global Wealth Report 2024). Assets managed by the asset management and wealth sector grew by 30% between 2018 and 2023, totaling US$4 trillion, with 54% of these assets sourced from investors outside of Mainland China and HK. #2 private equity hub in Asia after mainland China, with an AUM of US $229 billion as of the end of 2024.
The largest hedge fund hub in Asia: 700 hedge funds managed in HK with an AUM of US$188 billion as of January 2025. HK holds the highest number of ultra-high-net-worth individuals in Asia, with over 12,500 residents worth at least US $30 million. There are over 2,700 single-family offices in HK.
Total AUM of the private banking and private wealth management business under registered institutions and licensed corporations stand at US $ 1.2 trillion at end- 2023.
Strong capital market
HK is a major hub for arranging international bond issuances in Asia. Close to US $90 billion worth of Asian international bond issuances were arranged in HK in 2023, equivalent to around 25% of the regional market.
HK continues to be one of the world’s top fundraising centers, with a total of 71 company listings raising US $11 billion in 2024, up 89% from 2023 and ranked global #4.
HK is a leading green finance hub in the region. Total green and sustainable bonds and loans issued in HK amounted to US$ 84.4 billion in 2024, up 61.4% from the year before.
Largest offshore RMB Center
HK is the largest and most important global offshore Renminbi (RMB) business hub, with the world’s deepest RMB liquidity pool outside Mainland China of around RMB one trillion, supporting the vibrant offshore RMB business.
Over 70% of the world’s offshore RMB payments are processed by HK consistently, according to SWIFT statics.
HK is the world’s #1 in RMB FX turnover: US$191 billion per day.
Deep talent pool
HK is #2 in Asia in IMD’S World Talent Ranking 2024 acknowledging the high quality of the skills and competencies offered by the city’s talent pool.
HK is home to a large pool of trilingual talents that are proficient with both the Chinese and international markets.
Apart from the Mainland China, a significant number of talents come from regions including the US, Japan, South Korea, the UK and Taiwan.
Dominant gateway to mainland China
With its strengths as an international financial center and its unique advantage of having close links with Mainland China, HK has been the dominant gateway to Mainland China and the global hub for offshore RMB business.
HK originates and intermediates two-thirds of Mainland China’s inward foreign direct investment (FDI) and outward direct investment (ODI) as well as most financial investments. It is the best place to capture Mainland China opportunities.
HK offers a wide range of RMB financial services including clearing and settlement, financing, asset management, risk management, etc.
Connect Schemes
HK’s gateway position is reinforced by many Connect Schemes with Mainland China, including Stock Connect, Bond Connect, Cross-boundary Wealth Management Connect (WMC) and Swap Connect which facilitate mutual capital market access.
Over 70% of foreign holdings of Chinese stocks are held through Stock Connect as of end-2024, and over half of onshore bond transactions are traded through Bond Connect in 2024.
In 2024, the total transaction amount of Northbond Connect reached RMB 10.4 trillion, marking a year-on-year increase of 4%.
As of end-2024, around 136,000 individual investors have participated in WMC (including Guangdong, HK and Macao) and conducted cross-boundary remittances amounting to more than US$12.6 billion.
Fintech, local development
The HKMA’s fintech journey started in 2017 with the launch of seven Smart Banking initiatives. We unveiled the “Fintech 2025” strategy in 2021 to drive fintech development in HK.
In the past few years, there has been rapid development in HK’s fintech space in areas such as digital banks, stored value facilities (SVF), Faster Payment System ( FPS) and tokenization.
The HKMA is working closely with the industry through the Project Ensemble Sandbox to experiment with different tokenization use cases across four main themes: fixed income and investment funds, liquidity management, green and sustainable finance and trade and supply chain finance.
In 2019, we outlined high-level principals for the use of artificial intelligence by banks. Last year, we launched the Generative Artificial Intelligence (Gen A.I.) Sandbox in collaboration with the Hong Kong Cyberport providing banks a risk-controlled environment to develop and test A.I. solutions.
The HKMA believes that global connections are crucial to the development of fintech and has established and maintained close collaboration with different jurisdictions. These include the central bank digital currency (CBDC) research for cross-border payments, or Project mBridge, in collaboration with the Bank of Thailand, the Digital Currency Institute of the People’s Bank of China, and the Central Bank of the United Arab Emirates. The Saudi Central Bank has confirmed to join as a full participant of the mBridge minimum viable product platform.
In 2023, the HKMA joined hands with the Bank of Thailand to link up FPS and Thailand’s PromptPay, enabling cross-border QR payments between the two jurisdictions. Meanwhile, we are working closely with the PBoC to connect FPS with the Mainland’s Internet Banking Payment System.
Green and sustainable finance
To further consolidate HK’s position as the sustainable finance hub in the region and support the sustainable development of Asia and beyond, the HKMA launched the Sustainable Finance Action Agenda in October 2024, which includes eight goals in four areas. All banks to strive to achieve net zero in their own operations by 2023 and in their financial emissions by 2050.
BY ADDISALEM MULAT
THE ETHIOPIAN HERALD THURSDAY 5 JUNE 2025
