This is the sixth and final part of the exclusive Capital Connectors series in which influential Chinese and global bankers reveal the opportunities and challenges for Hong Kong in its evolution as an international financial hub.
If history serves as a guide, Hong Kong’s continued reign as a premier international financial centre depends on a time-tested formula: adapting to meet evolving needs, particularly in response to the development of China’s economy, according to Wang Lei, CEO of Huatai Financial Holdings.
From introducing red chips and H-shares to the creation of Chapter 18A and Chapter 18C listing rules and confidential filings, Hong Kong’s financial innovation over the decades not only served foreign capital, but more importantly, met the evolving needs of mainland China’s opening-up and reforms.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
Now, as China pivots towards tech self-sufficiency and advanced manufacturing development, Hong Kong faces a new task, according to Wang.
“Hong Kong’s success as an international financial hub always lies in how it meets the motherland’s financing demands,” he said. “Like in the past, this will remain a tremendous opportunity for Hong Kong in this new era.”
There has been a surge in the number of Chinese hi-tech and biotech start-ups seeking Hong Kong listings. Photo: Edmond So alt=There has been a surge in the number of Chinese hi-tech and biotech start-ups seeking Hong Kong listings. Photo: Edmond So>
Wang, who is also a member of the Hong Kong Chief Executive’s Council of Advisers, said the city needed to design “financial frameworks focusing on specialised technology sectors to support [capital needs from] global companies”.
His remarks come amid a surge of Chinese hi-tech and biotech start-ups seeking Hong Kong listings, spurred by the domestic artificial intelligence boom sparked by Hangzhou-based DeepSeek and a flurry of licensing-out deals with global pharmaceutical corporations.
In May, the bourse operator allowed confidential filings for companies eligible under Chapters 18A, for pre-revenue biotech start-ups, and 18C, for high-growth firms in AI, robotics and advanced manufacturing. Late last year, the city’s regulators slashed IPO review times for existing mainland-listed companies and qualified applicants to 40 business days.
These reforms were essential to support a fundamental shift in China’s economic development, according to Wang. Amid geopolitical fragmentation, “China develops its own chips, large language models and vaccines. It designs robotics to compete with those from the US, Japan and Europe,” he said.
“Outstanding Chinese companies come out one after the other, and now many of the best focus on artificial intelligence, and the innovative regulations connect China’s top-tier companies with international capital,” Wang said, adding that Hong Kong should continue reforming its capital market and listing rules to provide financing for global emerging sectors.
Hong Kong’s rise as a global finance hub has been inseparable from China’s economic transformation. Since Deng Xiaoping launched the country’s reform and opening-up in 1978 and later introduced “the one country, two systems” framework, Hong Kong has played a crucial role as a financial gateway for mainland enterprises, according to Wang.
In the 1990s, Hong Kong was one of the “four Asian dragons”, having achieved average annual growth of 7 per cent since the 1960s. The market’s capitalisation was almost eight times China’s entire foreign exchange reserves at that time, making the city the ideal location for Chinese companies to access a deeper pool of capital.
That helped transform state-owned enterprises into modern companies with shareholding structures suited for raising international funds, and in the process, drawing foreign capital into the city, according to Wang.
Hong Kong cemented its position as an international financial centre as China grew into the world’s second-largest economy in the early 2000s, added Wang. Hong Kong overtook the United States and UK to top the World Economic Forum’s fourth annual Financial Development Report in 2011, becoming the first Asian financial centre to do so.
Nowadays, the move towards renminbi internationalisation offers new opportunities. “More Chinese companies … are investing and settling with global markets,” said Wang. “The need for the offshore yuan market grows. China is no longer a capital-scarce country. It has grown into the world’s second largest capital market, second only to the US.”
Commercial banks in Hong Kong have “tremendous opportunities” as the city develops into an offshore renminbi hub, according to Wang. For example, the city will launch a Renminbi Business Facility this month to support banks in offering yuan loans to companies, with China’s four largest banks among the 24 participants.
In fact, Hong Kong processes over 70 per cent of global offshore renminbi payments, making it the world’s largest offshore renminbi centre. It also has the world’s deepest offshore renminbi liquidity pool of around 1 trillion yuan (US$140.4 billion).
Financial ties between the mainland and Hong Kong continue to grow. Mainland investors trading through the Stock Connect scheme accounted for one-fourth of Hong Kong’s market turnover in the first eight months, surpassing historical annual levels.
“Foreign capital still holds a reasonable share, but compared to 20 years ago, capital coming from China now plays a far more important role,” Wang said.
Hong Kong processes over 70 per cent of global offshore yuan payments. Photo: EPA-EFE alt=Hong Kong processes over 70 per cent of global offshore yuan payments. Photo: EPA-EFE>
Total market capitalisation in mainland China and Hong Kong had surged by about US$6.9 trillion since August last year, exceeding the total value of India’s entire listed universe, according to an HSBC report.
Wang said Hong Kong should enhance its global role by strengthening its trading systems, deepening internationalisation and seeking institutional innovation.
“As an international capital centre, Hong Kong should not only leverage these advantages but also strengthen them,” he said. “As blockchain and AI develop, the question is whether we can apply these innovations to our capital markets, making transactions faster and more efficient.”
Stock Connect has proven successful since it was introduced in 2014, expanding to include bonds, ETFs and interest rate swaps. Discussions are under way about expanding it to wealth management products and giving it wider geographic coverage.
“Hong Kong has achieved a very high level of financial connectivity with the mainland through various schemes, but when it comes to further development, the work is never-ending,” Wang said.
Huatai Financial Holdings is a subsidiary of Nanjing-headquartered Huatai Securities. In the first half of this year, the parent company underwrote 14 equity deals valued at 49 billion yuan, placing it second in IPO underwriting by value in the A-share market. It also sponsored the Belt and Road Summit 2025 held in Hong Kong.
