Recently, the Secretary for Financial Services and the Treasury of the Hong Kong SAR Government, Mr. Paul Chan, stated in a blog post that in the face of an ever-changing global political and economic landscape, Hong Kong is actively seeking new breakthroughs within the international financial system. Furthermore, the 2024 Policy Address proposed that Hong Kong will use gold as a key initiative to establish a commodity trading ecosystem, demonstrating its steady progress toward becoming an international gold trading center.

In response to Mr. Chan's remarks regarding this development, Mr. Cheung Tak-hei, Chairman of the Hong Kong Gold Exchange, stated in an interview with Wen Wei Po that the Exchange will actively cooperate with the SAR government in developing the Hong Kong International Gold Trading Center. The SAR government anticipates launching a central clearing framework for gold trading by the second quarter of next year. The Exchange has also proposed the construction of a storage facility in the Northern Metropolis with a capacity of 1,000 tonnes of gold to support the development of the center.

Last year's Policy Address proposed that Hong Kong would use gold as a starting point to establish a commodity trading ecosystem. Key policy priorities include expanding the ability for users and investors to deposit and deliver physical gold in Hong Kong, driving the development of derivative financial services such as mortgages and borrowing, and creating new growth areas for the financial industry. Mr. Cheung Tak-hei stated that the Hong Kong Gold and Silver Exchange would officially be renamed the Hong Kong Gold Exchange on 1 January 2025, becoming the sole spot gold exchange in Hong Kong and the only one recognised by the SAR Government.

He stated that the industry was very encouraged and excited by the Chief Executive's proposal in the 2024 Policy Address to build an international gold trading centre. The industry is actively promoting and participating in this vision and is willing to cooperate with the SAR Government on operational and institutional aspects. Three of the 11 members of the Hong Kong Gold Industry Development Group established by the SAR Government are representatives of the Hong Kong Gold Exchange. They actively cooperate with the SAR Government on its policy initiatives and maintain close communication with it. For decades, Hong Kong has been an international gold trading centre, but due to various factors, some gold trading business has been lost to destinations such as Singapore and Dubai. Hong Kong needs to re-establish itself as an international gold trading centre. Currently, Hong Kong's physical gold trading volume is substantial, ranking third or fourth globally. With the strong support of the SAR Government, the robust cooperation of the Hong Kong Gold Exchange, and the enormous demand from Mainland China, Hong Kong's prospects for building an international gold trading centre are promising.

However, Mr. Cheung emphasised that the biggest challenge in building an international gold trading centre in Hong Kong is to quickly establish a central clearing and settlement framework. Currently, many transactions are conducted over-the-counter (OTC). Therefore, the Hong Kong Gold Exchange proposed to the SAR Government that the first step should be to launch an international central clearing and settlement centre, for which it can provide valuable advice, extensive connections, and resources. The Gold Exchange anticipates that the SAR Government will establish the framework by the second quarter of 2026. Thereafter, it will consult with the SAR Government, financial institutions, and member companies to ensure an early launch.

The Northern Metropolis offers warehouse advantages due to its proximity to Shenzhen.

Regarding the storage issues involved in gold trading, Mr. Cheung stated that the gold delivery warehouse at Hong Kong Airport currently has a capacity of only 150 tonnes and is being expanded to 250 tonnes, but this remains insufficient. The Exchange hopes to build a 1,000-tonne warehouse in the future. To this end, he suggested building a warehouse in the Northern Metropolis. Its proximity to Shenzhen and position facing vast Mainland demand would facilitate logistics and reduce costs. The SAR Government is still considering feasible options. The Hong Kong Gold Exchange will actively cooperate with the government in the construction and promotion of the new warehouse and will participate in and assist with its management and business development.

Regarding cooperation with gold and jewellery companies in the Greater Bay Area, Mr. Cheung believes that this requires careful design and planning. For now, the SAR Government will first complete the infrastructure of the gold trading centre and then invite Mainland and international participants to collaborate in jointly promoting Hong Kong's development as an international gold trading centre.

Upgrading Hong Kong's Gold Market to Become an Asian Pricing Centre

(Reporter Zhou Shaoji) Last year's Policy Address proposed that Hong Kong would use gold as a starting point to establish a commodity trading ecosystem. The market expects that the establishment of a precious metals market will continue to be a focus of this year's Policy Address. The Financial Services and the Treasury Bureau established the "Working Group on Promoting Gold Market Development" in December last year. The Working Group, together with regulators, exchanges, and industry representatives, is conducting in-depth research on feasible development strategies, which is expected to lay the groundwork for the next phase of policy implementation. Legislative Council member Ms. Elizabeth Quat said that Hong Kong should further accelerate the construction of an international gold trading centre, and its positioning should be aligned with the national strategic macro-layout, which will be beneficial to the country's long-term development.