John Lee: Exploring shortening the stock settlement cycle to T+1, implementing a regime for stablecoin issuers, and building a regional gold reserve hub.

John Lee: Exploring shortening the stock settlement cycle to T+1, implementing a regime for stablecoin issuers, and building a regional gold reserve hub.

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At 11:00 on the 17th, Chief Executive of the Hong Kong SAR, John Lee, delivered the Chief Executive’s 2025 Policy Address in the Legislative Council. This is the fourth policy address since John Lee took office.

John Lee stated that the Policy Address is both a timetable for Hong Kong to fully “focus on the economy, pursue development, and benefit people’s livelihoods”, accelerating the path from “order to prosperity,” and a strategic plan for Hong Kong to proactively align with the national development strategy and achieve breakthroughs. In the report, John Lee put forward concrete measures regarding accelerating the development of the Northern Metropolis, industrial growth and innovation, and consolidating Hong Kong’s position as an international financial center.

John Lee stated: Helping mainland technology enterprises raise funds in Hong Kong, exploring shortening the stock settlement cycle to T+1. Assisting Chinese concept stocks to choose Hong Kong as the preferred place to return to the market; promoting the inclusion of the RMB trading counter for Hong Kong stocks in southbound “Stock Connect” trading. Accelerating the establishment of an international gold trading market, with specific measures including promoting the expansion of gold storage in Hong Kong by the Airport Authority and financial institutions, with a target to exceed 2,000 tons in three years, and building a regional gold reserve hub.

At the same time, he said that efforts would continue to optimize “Cross-border Express Payment”, expanding remittance applications related to people’s livelihoods. Next year, the SAR government will improve the disbursement arrangements for portable cash assistance, enabling eligible elderly Hong Kong residents living in Guangdong and Fujian to opt for the funds to be remitted directly into their designated mainland bank accounts.

Starting from five major areas to consolidate Hong Kong’s status as an international financial center

On consolidating Hong Kong’s position as an international financial center, John Lee specifically mentioned the fields of stocks, bonds, gold, and family offices in the report.

In the stock market, John Lee stated that Hong Kong will help mainland technology companies raise funds in Hong Kong through the “Special Channel for Tech Enterprises,” strengthening financial support for the nation’s aim of becoming a tech powerhouse; further improving the main board listing and structured product issuance mechanism; researching the optimization of listing rules for companies with weighted voting rights; exploring shortening the stock settlement cycle to T+1; encouraging more overseas companies to seek secondary listing in Hong Kong; assisting Chinese concept stocks to make Hong Kong their preferred return destination; promoting the inclusion of the RMB trading counter for Hong Kong stocks in southbound “Stock Connect.”

In the bond market, the government will work to consolidate Hong Kong’s bond center status, including enhancing financial infrastructure, such as a partnership between the HKMA’s CMU OmniClear and HKEx to allow investors to centrally manage and cross-collateralize different assets like stocks and bonds on a single platform, enabling linkage of various “connect” mechanisms; establishing connections with markets in Switzerland, the UAE, etc.; and promoting the use of offshore Chinese government bonds as collateral in different clearinghouses, further enriching the use cases of RMB assets. In addition, the SFC is studying the feasibility of establishing and operating an electronic bond trading platform, and actively promoting the creation of a commercial repo market and central counterparty system in Hong Kong to enhance market liquidity.

Furthermore, the government will keep working with relevant mainland bodies to introduce offshore government bond futures in Hong Kong, expand the types of interest rate derivatives under “Swap Connect,” promote the development of over-the-counter derivatives, and appropriately launch cross-border RMB repo business with the mainland. The SFC, HKMA, and HKEx will also increase market engagement to encourage more enterprises to issue bonds in Hong Kong, drawing more global funds into the Hong Kong bond market. The SFC and HKMA will release a “Fixed Income and Currency” roadmap to elaborate on related details.

In the gold market, John Lee stated the establishment of an international gold trading market would be accelerated, with specific measures such as promoting the expansion of gold storage by the Airport Authority and financial institutions in Hong Kong, aiming to exceed 2,000 tons in three years, and building a regional gold reserve hub; encouraging gold merchants to set up or expand refineries in Hong Kong, and collaborating with the mainland to process incoming gold, refine it, and export it to Hong Kong for trade and delivery; establishing a central clearing system for gold in Hong Kong to provide efficient and trusted clearing services for international standard gold trading and inviting the Shanghai Gold Exchange to participate, preparing for future market connectivity with the mainland; enriching gold investment tools, assisting issuers in launching gold funds, supporting development of new products such as tokenized gold investment products; supporting the industry to establish a gold industry association and a platform for dialogue with the government and regulators, strengthening marketing and attracting “Belt and Road” clients, and strengthening talent training.

In commodities, Hong Kong will cooperate with exchanges in the Greater Bay Area to develop new businesses, such as commodity trading and carbon trading. HKEx is the controlling shareholder of the Qianhai United Trading Center and will continue to intensify cooperation between the two regions, developing the offshore spot soybean market. HKEx’s carbon market, Core Climate, will also explore cross-border trading settlement with the Greater Bay Area pilot carbon market.

In family offices, the SAR government will further optimize tax incentives for funds, single-family offices, and carried interest to attract more fund managers to establish themselves in Hong Kong; the SFC will actively promote the inclusion of Real Estate Investment Trusts (REITs) as eligible “Connect” products to boost liquidity of REITs in both regions; optimization of the Qualified Foreign Limited Partnership (QFLP) mechanism will also be promoted, particularly through stronger cooperation with Qianhai and Shanghai to attract more overseas funds into the mainland PE market. The Hong Kong Investment Corporation will nurture high-potential local PE and hedge fund institutions through direct or co-investment.

Hong Kong is implementing a stablecoin issuer regime

John Lee stated that the HKMA will promote commercial banks in launching tokenized deposits and push forward actual tokenized asset transactions. For example, using tokenized deposits to settle tokenized money market funds, assisting the government to make tokenized bond issuances routine, and encouraging banks through regulatory sandboxes to strengthen risk management, etc.

Hong Kong is implementing a stablecoin issuer regime and has made legislative proposals for licensing digital asset trading and custody services. The SFC is studying, on the premise of adequate investor protection, the expansion of the types of digital asset products and services available to professional investors, while strengthening international tax cooperation to combat cross-border tax evasion. The SFC will also introduce automated reporting and data monitoring tools to build a risk defense line for Hong Kong’s digital asset sector.

Supporting locally funded universities to attract top international AI researchers to Hong Kong

On industrial development and innovation, John Lee specifically mentioned artificial intelligence (AI), including advancing AI research and talent, strengthening AI funding, boosting AI data strengths, and expanding AI applications. John Lee stated the government previously launched a HK$3 billion “Frontier Technology Research Support Scheme,” which will soon open for applications to support local funded universities in attracting top international AI researchers to Hong Kong to lead frontier basic research. In addition, HK$1 billion has been earmarked to establish the “Hong Kong AI Research Institute” in 2026, fostering upstream AI R&D, mid- and downstream commercialization, and the creation of application scenarios. The Hong Kong Investment Corporation, a government-owned patient capital entity, has invested in several AI firms in large language models, cloud computing, and AI drug discovery, among others, and will continue investing in the AI sector in the future.

Accelerating large-scale, unmanned development of autonomous driving in Hong Kong

John Lee stated the SAR government had already established a regulatory framework for autonomous vehicles last year. This year, three regions will be designated for testing, with the goal of enabling autonomous vehicles to travel between areas and connect to other transportation modes, accelerating the large-scale, unmanned development of autonomous driving in Hong Kong, striving for early commercial operation, and helping the industry use Hong Kong as a platform to explore overseas, especially right-hand-drive markets. The SAR government will seek to pass the ride-hailing regulation bill before the end of the current Legislative Council session.

Establishing the “Commodity Strategy Committee”

John Lee stated that the SAR government will establish a “Commodity Strategy Committee,” led by the Financial Secretary and bringing together industry representatives to strengthen top-level design and long-term strategy formulation for commodity policy. At the same time, Hong Kong will continue the direction set in last year’s Policy Address to develop Hong Kong’s commodity trading ecosystem, including: the London Metal Exchange, a wholly-owned subsidiary of HKEx, has approved eight local delivery warehouses, and Hong Kong will support the industry in establishing more recognized warehouses; offering a half-tax incentive for bulk commodity traders setting up in Hong Kong, stimulating demand for Hong Kong’s shipping and professional maritime services; using financial innovation to streamline international bulk commodity trading, including cooperation between the HKMA and the Central Bank of Brazil to test digitization of bills of lading and tokenization of deposits, etc., to facilitate trade; deepening connectivity with the Guangzhou Futures Exchange and other mainland commodity markets to support the internationalization of the national commodity market.

John Lee mentioned he has accepted the recommendations of the “Working Group on the Development of the Gold Market”, to be implemented by the Financial Services and the Treasury Bureau, including:

1. Promote the expansion of gold storage by the Airport Authority and financial institutions in Hong Kong, with a target of exceeding 2,000 tons in three years, building a regional gold reserve hub;

2. Encourage gold merchants to set up or expand refineries in Hong Kong, and cooperate with the mainland to process incoming gold, refine it, and export it to Hong Kong for trading and delivery purposes;

3. Establish a central gold clearing system in Hong Kong to provide efficient and trusted clearing services for international standard gold trading, and invite the Shanghai Gold Exchange to participate, preparing for future cross-border connectivity with the mainland market;

4. Enrich gold investment tools, assist issuers in launching gold funds, support the development of new products such as tokenized gold investment products;

5. Support the industry to establish a gold industry association, create a platform for dialogue with the government and regulators, strengthen promotion and attract “Belt and Road” customers, and enhance talent training.

Hong Kong to release blueprint for Chinese medicine development

John Lee stated that the Hong Kong Chinese Medicine Hospital and the permanent building of the Government Chinese Medicines Testing Institute will commence services in phases from December this year. The SAR government will step up efforts to promote Hong Kong’s Chinese medicine development and support the nation’s push for the internationalization of traditional Chinese medicine, including:

1. Releasing the “Chinese Medicine Development Blueprint” by the end of the year, covering the establishment of governance structure and service systems, leveraging strengths, promoting collaboration between Chinese and Western medicine, fostering research and innovation, as well as cultural inheritance.

2. In its first year, the Hong Kong Chinese Medicine Hospital will provide a number of specialist TCM services, including common elderly diseases (such as degenerative diseases and post-stroke rehabilitation).

3. Promote the use of the Electronic Health Record Sharing System for communication within the Chinese medicine sector, and further expand the scope of mutual exchange between Chinese and Western medicine records.

4. Advance the development of collaborative Chinese and Western medicine services, expand the HA “Knee Osteoarthritis Treatment” program to all hospital clusters, and launch a “palliative care” pilot project.

Attracting more leading international and mainland pharmaceutical companies to settle in Hong Kong

John Lee stated the SAR government will attract more pharmaceutical firms to establish in Hong Kong to carry out clinical trials and treatment of rare diseases, high-end cancer drugs, and advanced therapies. Patient recruitment and trial initiation efficiency will be actively improved; through the Hetao “Greater Bay Area Clinical Trial Collaboration Platform”, pharmaceutical enterprises can conduct synchronized trials in Hong Kong and Shenzhen. Preparations are also being made to establish an “International Clinical Trials Academy” to cultivate GBA clinical trial professionals and hold international summits and forums, among others.

The SAR government will establish the “Hong Kong Drug and Medical Device Regulatory Center” in 2026 and submit legislative proposals to regulate medical devices, aiming to become an internationally recognized authoritative regulatory agency as soon as possible. Meanwhile, Hong Kong will accelerate the “1+” new drug approval mechanism, piloting the priority approval of innovative drugs recommended by the Hospital Authority to treat severe or rare diseases, helping pharma companies launch innovative drugs to market faster. Hong Kong will also promote standardization of clinical data within the Greater Bay Area and build a real-world data platform to help pharma companies introduce innovative drugs to the mainland and global markets more efficiently.

In addition, the HA will establish an “Office for Introduction of Innovative Drugs and Medical Devices” to proactively introduce new drugs and devices that meet patient needs and are cost-effective, by utilizing big data to identify treatment needs and benefits for local patients.

New Capital Investment Entrant Scheme

John Lee stated that the “New Capital Investment Entrant Scheme” requires applicants to invest not less than HK$30 million in Hong Kong, of which property investment (residential or non-residential) currently counts for a maximum of HK$10 million. The government will optimize the scheme: if purchasing non-residential property, the amount eligible for calculation will be increased from HK$10 million to HK$15 million, with no restriction on transaction price; if purchasing residential property, the eligible amount will remain at HK$10 million, but the eligible threshold for residential property investment will be relaxed, with the minimum price lowered from HK$50 million to HK$30 million.

He stated that the HKMA will encourage the banking sector, particularly mainland banks, to establish regional headquarters in Hong Kong to reach out to Southeast Asian and Middle Eastern markets. More mainland enterprises will be attracted to set up treasury centers in Hong Kong, with a study to optimize tax reduction measures to be completed in the first half of 2026.

John Lee also stated that efforts would continue to optimize “Cross-border Express Payment”, expanding remittance application scenarios related to people’s livelihoods. The SAR government will improve the disbursement of portable cash assistance next year, so that eligible elderly Hong Kong residents living in Guangdong and Fujian can choose to have funds remitted directly into their mainland bank accounts.

The HKMA will encourage the banking industry, especially mainland banks, to set up regional headquarters in Hong Kong, leveraging Hong Kong’s advantages to reach out to Southeast Asia and the Middle East, and provide more comprehensive cross-border financial solutions; attracting more mainland enterprises to set up treasury centers in Hong Kong, with tax reduction measures to be optimized by the first half of 2026.

In addition, it is reported that in 2024, over 1,400 regional headquarters of foreign companies are set up in Hong Kong, including more than 300 from the mainland. Various tailor-made outbound solutions for “going global” enterprises are to be formulated, including: the HKMA and Saudi Arabia's Public Investment Fund (PIF) have signed an MoU establishing a new US$1 billion investment fund to help “go global” companies in Hong Kong and other GBA cities expand to Saudi Arabia.

John Lee stated that in order to improve border crossing experience, the new Huanggang and Sha Tau Kok checkpoints under reconstruction will implement a “joint inspection, one-time release” customs clearance model, relax the e-Channel registration conditions for regular travelers to Hong Kong, and set up the city’s first “contactless clearance” pilot at the Hong Kong-Zhuhai-Macao Bridge checkpoint using facial recognition for entry and exit procedures.

Establishing a “Principal Official accountability system” to further strengthen governance

John Lee stated the SAR government will establish a clear “Principal Official accountability system” to further strengthen governance. He said that to enhance the sense of responsibility among senior civil servants and improve overall department management, the most direct and effective way is to increase the sense of accountability among department heads, making it clear that principal officials are responsible for building an effective management team and leading senior civil servants in the management of staff and operational systems.

John Lee explained that the “Principal Official accountability system” will establish an investigation mechanism, with cases investigated at two levels depending on severity. General cases will be handled by department heads, while serious/systemic issues, or issues possibly involving department heads, will be handled by a special investigation team set up for the accountability system. This special team is independent from the government system to ensure investigations are fair and impartial.

Hong Kong’s I&T Industry Guidance Fund to launch in 2026–2027

John Lee stated that Hong Kong’s Innovation, Technology and Industry Bureau is pushing forward the assembly of two pilot production lines at the Hong Kong Microelectronics Research Institute, and will complete the preparatory work for the Life Health Research Institute and Hong Kong AI Research Institute next year. In addition, Hong Kong will speed up building the third “InnoHK Innovation Hong Kong R&D Platform”, focusing on sustainable development, energy, advanced manufacturing and materials, with R&D centers due for establishment in the first half of 2026. The highly anticipated “I&T Industry Guidance Fund” will also be launched in the 2026–2027 fiscal year, with the government actively guiding market investment in strategic emerging and future sectors.

Risk warning and disclaimerThe market bears risks, and investments need to be cautious. This article does not constitute individual investment advice, nor does it take into account the special investment objectives, financial situation, or needs of any individual user. Users should consider whether any opinions, viewpoints, or conclusions in this article apply to their specific circumstances. Investing accordingly is at your own risk. ```