CEO Blog

And this year, I sensed a difference in the mood.

Geopolitical uncertainty was top of mind as it has been for the last few years. But this year, the conversations my colleagues and I had with other participants from around the world were also characterised by, if not optimism, then at least a sense of confidence that opportunities were to be found amidst the volatility. And there was a special interest in the opportunities of China.

This wasn’t surprising to us. We had been seeing renewed activity in the fundraising market with record trading volumes. Global investors are still interested in China and when the moment is right, many choose to access the opportunities of the Mainland through Hong Kong, which resulted in our average daily turnover (ADT) breaking all-time records multiple times in the last year. 

We also saw increasing participation of Mainland Chinese investors in offshore markets, as demonstrated by Southbound Stock Connect volumes, with ADT increasing 55% in 2024. The vast pools of capital in Mainland China are also looking to diversify.

Capital will always want to connect with opportunity. 

Mainland China’s fixed-income market is, at US$24.6 trillion, the second largest in the world. It has grown an incredible five-fold in the last ten years. Mainland China has been consistently delivering market reform, including increasing connectivity to global markets. With strong policy support, we can expect the growth trajectory of the Mainland’s FIC market to continue and connectivity with offshore markets to increase. This promises vast new opportunities for global investors to participate in China’s growth story. 

At HKEX, we have been supporting their participation by building an increasingly comprehensive fixed income marketplace with the right channels, platforms and products. 

A diverse investor base is a cornerstone of market liquidity and resilience. Bond Connect is a key channel for a vibrant community of international investors to access China’s domestic fixed income market, as demonstrated by the fact that the ADT of its northbound link has set records every year since it was launched in 2017. 

As evident in our equities space, another cornerstone of fixed-income markets is a well-functioning derivatives market, which allows investors to effectively and efficiently manage their risks. To that end, HKEX has been building the financial infrastructure that facilitates the clearing of over-the-counter interest rate and currency derivatives; the trading and clearing of currency futures on exchange; and the linking of onshore and offshore markets by Swap Connect. And this is happening at a time of exceptional growth in our over-the-counter (OTC) cleared volumes.  With significant contribution from Swap Connect, HKEX OTC Clear’s clearing volume reached a record high of US$1.19 trillion in 2024 – an increase of 142% compared with 2023. 

We remain fully committed to the continuous development of risk management products, recently enhancing the collateral efficiency of Swap Connect and announcing plans to launch China Treasury Bond Futures in Hong Kong, subject to regulatory approval.

Today, we marked a new milestone in building Hong Kong’s FIC ecosystem with the announcement to collaborate with CMU OmniClear Limited. With US$610 billion assets under custody, CMU OmniClear carries out the operations of the Central Moneymarkets Unit (CMU), Hong Kong’s fixed income central securities depository (CSD), on behalf of the Hong Kong Monetary Authority (HKMA). Through this collaboration, we will work with the HKMA and CMU OmniClear to enhance Hong Kong’s post-trade securities infrastructure and support the long-term development of the city’s FIC ecosystem.

Our collaboration will be a key enabler for future market developments, enriching liquidity management tools for investors and enhancing the appeal of RMB-denominated bonds, which in turn will promote RMB internationalisation. Building momentum in bond and derivatives markets will unlock a powerful flywheel effect, with futures and swap market liquidity driving enhanced price discovery and lower funding costs and deepening bond market liquidity for future bond issuances – a reinforcing, continuous growth cycle across the FIC ecosystem.

The development of our FIC business is a long-term commitment, but today’s announcement is an important milestone which brings HKEX a step closer to providing a complete ecosystem for bonds – to do for the fixed income market what we have achieved for the equities market – which will further enhance Hong Kong’s status as an international financial centre, a global risk management centre, and an offshore RMB hub.

It has been several weeks since we listened to the thoughts and hopes of the international business community under the snow-capped peaks of Davos.  The pace of global events and news cycles is increasingly frenetic. But we are staying focused on the long term, and on longer story arcs. The China growth story – a story that has had such a far-reaching impact on global markets to date – is as compelling as ever.  And the story of capital connecting with opportunity is constant. 

We believe that a comprehensive ecosystem of China and RMB-related offerings, across all asset classes, will help fuel the next chapters of the China growth story by creating the right conditions for global capital to connect with opportunities of historical proportions. We know that Hong Kong is most suited to provide those conditions, with its unique and robust framework, deep markets, and international connectivity. And we are ready to play our role in making it happen.