The Hong Kong Special Administrative Region government will focus on developing world-class gold storage facilities in the city, thereby attracting more investors and users to store gold in Hong Kong, Acting Secretary for Financial Services and the Treasury Joseph Chan Ho-lim said on Wednesday.
He said this while replying to query in the Legislative Council regarding government steps to implement a proposal made by Chief Executive John Lee Ka-chiu in his 2024 Policy Address to propel Hong Kong into an international gold trading center.
Referring to the CE’s emphasis on exploring new growth areas, Chan said building an international gold trading center is a new growth point for Hong Kong to consolidate and enhance its status as an international financial center.
“Gold serves as a crucial anchor in the precious metals category, possessing multiple attributes as a commodity, a reserve asset, and an investment product. Under increasing global political and economic uncertainties, gold is one of the key hedging tools.”
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Many investors would like to store physical gold in different geographical locations, which presents opportunities for Hong Kong to develop the gold market, he added.
As the Precious Metals Depository operated by the Airport Authority Hong Kong (AAHK) since 2009 at the Hong Kong International Airport is nearing its full capacity, the AAHK is planning to expand the storage. During the initial phase, the capacity will be increased from the existing 150 tonnes to 200 tonnes, which will further be increased to up to 1,000 tonnes in subsequent phases with room reserved for further development, he told the LegCo.
The HKSAR government will also provide appropriate assistance if necessary for the industry's other plans to establish or expand gold storage, he added.
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“Based on increased storage, we expect to scale up associated support services in insurance, testing and certification, logistics, etc, while in parallel expanding related transactions including collateral, loan and hedging, hence creating a comprehensive ecosystem.”
This will drive all-round multi-currency trading, clearing and delivery, and the development of the regulatory system, thereby establishing a holistic gold trading center with an industry chain, said the acting secretary.
“We will also as appropriate explore mutual access with the Chinese mainland financial market, covering spot and futures markets.”
The Financial Services and the Treasury Bureau will set up a working group by 2024 to formulate plans to enhance the trading and regulatory mechanisms of the market. It will focus on gold supply and demand, product development, application of standards, clearing mechanism, logistics and storage, testing and certification, talent training, promotion in the mainland and overseas regions, cross-boundary collaboration, etc, he said.
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The working group will comprise of industry professionals, the Hong Kong Exchanges and Clearing Limited, Chinese Gold and Silver Exchange, financial institutions, etc, Chan said while replying to a related query.
“When discussing specific issues, the working group will invite the participation of relevant industry practitioners, e.g. those from the insurance and logistics sectors.”
The working group will also explore conducting promotion activities in the mainland and globally to attract mainland and international investors and users to store gold and conduct trading, clearing and delivery in Hong Kong, he added.
