The Chief Executive of Hong Kong proposed in the 2024 Policy Address to build an international gold trading center and promote the construction of a commodity trading ecosystem. Financial Secretary Paul Chan wrote that both can inject new energy into multiple industries, create new opportunities, and have enormous development potential He mentioned that the government plans to first increase gold storage facilities in Hong Kong and accelerate the expansion of related supporting businesses, and then expand derivative transactions to gradually build a complete ecosystem. The Financial Services and Treasury Bureau will establish a working group within the year to formulate plans for optimizing the market trading mechanism. As for commodity trading, the primary increment in the short and medium term is to promote commodity trade and its derivative value-added services The following is an article published by Financial Secretary Paul Chan on his blog on October 20th:

The Chief Executive released a new policy address last week. At a time when the international environment is rapidly changing and the local economy is in a critical period of transformation, the policy address proposes a series of measures to promote social 'reform and development together', not only consolidating and strengthening existing advantageous industries, but also fully exploring new economic growth points at full speed. Building an international gold trading center and promoting the construction of a commodity trading ecosystem are new entry points for consolidating and enhancing Hong Kong's position as an international financial, shipping, and trade center

Gold Trading Center

Gold is an important anchor in the precious metal category, possessing multiple attributes of commodity, reserve asset, and investment product. Especially in times of increasing global political and economic uncertainty, gold is one of the safe haven investment tools.

. As the geopolitical environment becomes increasingly complex and the situation in multiple regions remains uncertain, it can be expected that the global demand for gold will still be considerable. In addition, as a reserve currency asset, the pricing mechanism of gold is also different from that of general commodities, and it has important significance in the financial market The gold trading market in Hong Kong has a long history of development. Due to its proximity to the two major gold consumption markets of mainland China and India, and its advantageous geographical location, Hong Kong ranks among the top in the world in terms of gold import and export volume. The trading volume of gold in Hong Kong has also continued to increase. Over the past decade, the trading volume of 99 gold on the gold exchange has steadily increased, with a compound annual growth rate of over 18%. In the first quarter of this year, it increased by about 20% compared to the same period last year Faced with an increasingly complex geopolitical environment, many investors hope that gold can be stored in different regions, which has led to a sharp increase in demand for international level storage warehouses in the market, providing opportunities for the development of the gold market in Hong Kong. In fact, in response to the development of the global market, there is great room for growth in Hong Kong's real gold trading. Industry insiders estimate that the current daily trading volume of about 100 million US dollars has the potential to double As a first step, we plan to increase gold storage facilities in Hong Kong and accelerate the expansion of related supporting businesses such as trade, insurance, and logistics. Next, based on this foundation, expand related derivative transactions such as mortgages, borrowings, and hedging, gradually building a complete ecosystem. The Financial Services and Treasury Bureau will establish a working group including industry insiders within the year to formulate plans for optimizing market trading mechanisms After the consolidation of infrastructure for gold storage and trading, we can further explore and increase our connection with the mainland gold market. Under the unique institutional advantage of 'One Country, Two Systems', Hong Kong is able to connect the mainland and international markets. With controllable risks, it can develop more risk management tools and derivative products that meet market needs. In the long run, this will greatly enhance China's influence in the global gold market and has important strategic significance for enhancing Hong Kong's position as an international financial center

Commodity trading

In addition to gold, commodity trading, including non-ferrous metals, is also an important part of the economy, generating demand for different links such as trading, shipping, logistics, and warehousing. For many manufacturers in different industries, it is also an important part of ensuring stable supply of their key raw materials.

. It can be said that commodity trading involves a long industrial chain, which generates a large demand for financial services such as risk management and hedging Therefore, developing a commodity trading ecosystem can become a new support point for promoting the interconnected development of Hong Kong's international finance, shipping, and trade center. It can also drive more vigorous shipping and trade development in the entire Guangdong Hong Kong Macao region, and even stabilize the supply chain of producers in the region. In the short to medium term, our primary focus is on incremental growth and promoting commodity trade and its associated value-added services. In the ecosystem of commodities, the buyers and sellers of commodities are the shippers. Therefore, we need to both 'grab goods' and' grab shippers', striving to attract bulk commodity trading enterprises to set up headquarters or regional branches in Hong Kong. Building up the core market and trade will naturally increase the demand for high value-added services and supply chain services, and also attract more professional service agencies to settle in Hong Kong. We will study relevant supporting measures, including taxation, to increase the incentives for relevant enterprises to settle in Hong Kong

In addition, the London Metal Exchange, a subsidiary of the Hong Kong Stock Exchange, has earlier said that it would study setting up approved warehouses in Hong Kong to deliver bulk commodities, including non-ferrous metals, in order to improve its approved warehouse layout in Asia. The demand for bulk commodity trading in mainland China is huge, and setting up a recognized warehouse in Hong Kong provides the most convenient, cost-effective, and safer transportation channel for users in mainland China and even Asia. It can also better utilize Hong Kong's efficient services and advantages in trade, shipping, and finance Whether it is developing the international gold trading market or establishing a commodity trading ecosystem, it can inject new momentum and create new opportunities for multiple industries. Hong Kong has enormous development potential in this area, and we are accelerating our progress on this path. As long as we choose the right development goals, plan our development strategies, and steadily advance towards our goals, we will be able to unleash new growth drivers, accelerate Hong Kong's economic upgrading, transformation, and development in the new stage, and make new and greater contributions to the country's development