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The Hong Kong Chief Executive’s 2025 Policy Address has laid out a comprehensive roadmap aimed squarely at reinforcing the city’s position as a leading international financial centre. Several key initiatives directly impact the financial services sector, signalling significant opportunities and evolving regulatory landscapes. Below are the highlights most pertinent to our financial services industry:

1. Expanding Gold Investment & Tokenisation:

  • The Financial Services and the Treasury Bureau (FSTB) will spearhead initiatives to build an international gold trading market.
  • This includes assisting issuers in launching gold funds and supporting the development of novel investment products like tokenised gold, bridging traditional assets with digital innovation.

2. Advancing Fintech & Project Ensemble:

  • The Hong Kong Monetary Authority (HKMA) will continue driving Project Ensemble, focusing on the development of tokenisation infrastructure.
  • Key actions include encouraging commercial banks to introduce tokenised deposits.
  • The HKMA will promote live transactions of tokenised assets, such as settling tokenised money market funds using tokenised deposits, enhancing settlement efficiency and creating new market avenues.

3. Regulating Digital Assets & Enhancing Safeguards:

  • Implementation of a regime for stablecoin issuers is underway.
  • Legislative proposals are being formulated for licensing digital asset dealing and custodian service providers.
  • The Securities and Futures Commission (SFC) is studying the expansion of digital asset products and services offered to professional investors, contingent on robust investor protection frameworks.
  • International tax co-operation will be intensified to combat cross-border tax evasion.
  • The SFC will deploy automated reporting and data surveillance tools specifically to mitigate risks associated with digital assets in Hong Kong.

4. Revitalising Capital Markets:

  • Listing Regimes: The government will optimise the Main Board listing regime and the structured products issuance framework. Enhancements to listing requirements for companies with weighted voting rights (WVR) structures are under consideration.
  • Settlement Efficiency: Exploring the shortening of the stock settlement cycle to T+1 is a priority, aiming to align with global trends and reduce counterparty risk.
  • Attracting Listings: Efforts will be made to encourage more overseas enterprises to pursue secondary listings in Hong Kong and support China Concept Stock companies returning from overseas markets, positioning Hong Kong as their preferred destination.
  • RMB Trading: The inclusion of an RMB trading counter under Stock Connect’s Southbound trading for Hong Kong stocks will be pressed ahead, facilitating RMB internationalisation and deepening market access.

5. Boosting Asset & Wealth Management:

  • Tax Incentives: The preferential tax regimes for funds, single family offices (SFOs), and carried interest will be further enhanced to attract more funds to establish and operate in Hong Kong.
  • REIT Market Access: The SFC will actively promote the inclusion of Real Estate Investment Trusts (REITs) under mutual market access schemes to increase liquidity for REITs in both the Mainland and Hong Kong.
  • Attracting Foreign Capital: Collaboration with Qianhai and Shanghai will focus on facilitating enhancements to the Qualified Foreign Limited Partnership (QFLP) mechanism, aiming to attract more foreign capital into the Mainland’s private capital market.
  • Nurturing Local Funds: The Hong Kong Investment Corporation (HKIC) will nurture promising local private equity and hedge fund institutions through direct or co-investment strategies.

6. Enhancing the Capital Investment Entrant Scheme (CIES):

  • The scheme requires a minimum investment of HK$30 million in Hong Kong.
  • Non-residential Property: The maximum amount of investment counted towards the scheme for non-residential property purchases will be raised from HK$10 million to HK$15 million, with no transaction price threshold.
  • Residential Property: The investment counted for residential property purchases remains capped at HK$10 million.

Implications for the Financial Services Industry

The 2025 Policy Address underscores a clear, multi-faceted strategy: embracing digital transformation (tokenisation, digital assets), enhancing market efficiency and attractiveness (listing reforms, T+1, RMB counter), strengthening the asset management ecosystem (tax, REITs, QFLP), and refining investor immigration pathways. The emphasis on concurrent regulatory frameworks (stablecoins, digital asset licensing, SFC surveillance) highlights the commitment to fostering innovation responsibly. Firms operating in fund management, capital markets, fintech, digital assets, wealth management, and related legal and compliance fields should closely monitor the implementation timelines and details of these initiatives. The proposed changes present significant opportunities for product development, market expansion, and strategic repositioning, but also necessitate proactive engagement with evolving regulatory requirements.

Hong Kong continues to signal its intent to adapt and lead in the rapidly evolving global financial landscape. The success of these initiatives will hinge on effective collaboration between regulators, industry participants, and professional advisors.

WRITTEN BY

For further information, please contact:

Pinky Siu – Deacons,
pinky.siu@deacons.com

Pinky has substantial experience advising on the establishment of a wide range of listed and unlisted retail funds in Hong Kong, including SFC-authorised collective investment schemes, exchange-traded funds (ETFs), constituent funds of MPF schemes, approved pooled investment funds (APIFs) and index-tracking collective investment schemes (ITCIS).

Pinky also handles a wide range of securities and compliance matters affecting the asset management industry, including advising on Hong Kong’s disclosure of interests regulations and short position reporting.  She has considerable experience on SFC regulatory and compliance issues, and regularly advises SFC licensed intermediaries on their ongoing obligations.

Highlights

  • Assisted a client on the successful listing of its first ETF in Hong Kong. It is the first ETF which invests in onshore iron ore futures via the Dalian Commodity Exchange’s futures product internationalisation scheme, which permits Hong Kong and overseas managers to participate in the trading of Mainland Chinese iron ore futures.
  • Assisted an international investment manager in obtaining regulatory approval in connection with delisting and termination of its China A International ETF.
  • Assisted a substantial asset manager on the successful launch of three thematic ETFs designed for investors seeking exposure to the growing Chinese biotech and cloud computing sectors. The ETFs are the first of their kind to be listed on the Hong Kong exchange.
  • Advising on application for approval of regulated collective investment schemes; liaising with regulators – including the SFC, MPFA, Stock Exchange and AMCM (Monetary Authority of Macao); preparing and reviewing relevant documentation.

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