HONG KONG – The head of the Hong Kong Monetary Authority said on Wednesday that he expects Chinese mainland capital inflows to the Hong Kong Special Administrative Region to provide the biggest opportunity for the financial hub's capital markets in the next few years.

The Hong Kong SAR is planning to further relax rules on a wealth connect program with the Guangdong-Hong Kong-Macao Greater Bay Area and is exploring whether it can extend its coverage to more mainland cities, Eddie Yue Wai-man, HKMA chief executive, said at HSBC's Global Investment Summit in Hong Kong.

"I think the bigger opportunity in the next few years will come from what we call Southbound, Chinese capital going out to the world through Hong Kong," Yue said, compared to northbound flows that are offshore capital going into the mainland.

Mainland investments overseas have picked up and the SAR has benefited from these capital flows.

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Yue said the easing of rules governing the wealth connect program, launched in 2021, had helped boost capital flows into the city.

The number of mainland investor accounts under the program shot up from 25,000 to 95,000 in four months following the relaxation of the rules in February last year.

Yue didn't disclose more up-to-date figures, but added that authorities plan to further relax the mainland's investment rules.

"We will also explore whether it is possible to even extend the scheme geographically to other parts of China," he said.

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Between 20 percent and 30 percent of Hong Kong stock market's turnover is capital flowing from the mainland through the stock connect, according to Yue.

That trend is expected to strengthen in the years ahead, Yue added, as mainland investors continue to utilize stock, bond and wealth management connect channels to invest in the offshore investment hub.

"I'm quite hopeful that all these Southbound capital coming out from China into the world through Hong Kong will help provide the next push for Hong Kong's capital markets," he said.

Offshore listings of mainland companies in Hong Kong have swelled in recent months, with sizable tech and consumer companies expected to raise billions in the coming weeks.

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Yue said more long-term investors are returning to the Hong Kong market, encouraged by Beijing's stimulus policies and hopes fueled by AI innovation such as DeepSeek.

The banking chief also expects Hong Kong to benefit from the rising usage of the Chinese yuan in international trade in recent years spurred by a shift in trade corridors.

"We're also seeing a lot of funding activities in Hong Kong issuing RMB bonds," he said, adding that issuance doubled in three years to more than 1 trillion yuan ($137.66 billion) in 2024, and RMB lending increased by three times to 750 billion yuan during the same period.