Hong Kong’s Paul Chan Predicts Positive Market Response To Xi-trump Summit

Hong Kong’s finance chief has predicted a positive market response to the Xi-Trump summit, saying the mitigation of geopolitical uncertainties will bolster investor confidence.

Financial Secretary Paul Chan Mo-po made his prediction on a radio programme on Saturday, a day after Chinese President Xi Jinping wrapped up a three-day visit to Washington to meet with US counterpart Donald Trump, with promises of more talks despite limited deliverables.

“I believe the market will have a positive interpretation … Previously, the geopolitics caused concerns over economic prospects, leading to uncertainty and capital flow volatility. If this factor could be mitigated, investors would feel more secure when positioning their portfolios,” Chan said.

The minister said the national economy would continue to grow steadily, with domestic enterprises expanding overseas, benefiting Hong Kong, Southeast Asia and the Global South in general.

He said the nation would continue to play the role of the major engine for global economic growth.

He added that Hong Kong enjoyed geographic advantages that could help mainland Chinese enterprises go global, citing the good performance of the city’s initial public offering (IPO) market this year.

Chan also described Hong Kong’s hosting of the Apec Finance Ministers’ Meeting from October 20 to 21 as another opportunity to promote the advantages of doing business in the city.

“Beyond business delegates, the meeting will bring many political leaders to Hong Kong – this is important because having a deeper understanding of Hong Kong’s advantages, such as the uniqueness of ‘one country, two systems’ and the business environment, will ultimately help when they return home to consider policies and encourage their enterprises to do business here,” he said.

Financial Secretary Paul Chan has also addressed the city’s first five-year blueprint’s mention of plans to expand renminbi usage by settling government payments and commodities trading in the currency. Photo: Elson Li

Addressing the city’s first five-year blueprint’s mention of plans to expand renminbi usage by settling government payments and commodities trading in the currency, Chan sought to reassure stakeholders that the move would not impact the pegged exchange rate system.

“Our core strength lies in our unique advantages under ‘one country, two systems’ … we have an independent, separate currency, and everyone knows very well that the exchange rate is anchored within that specific band,” he said.

“This gives international investors peace of mind that whenever they transfer money in or out, the exchange rate stays strictly within that defined range. That certainty and confidence are vital to investors. For us as an international financial centre, it is equally indispensable. Therefore, this will absolutely never change.”

Chan said that the government had issued a portion of its bonds in renminbi to take advantage of lower interest rates, noting that converting the proceeds back into Hong Kong dollars still yielded a net financial benefit.

Building on this strategy, he said that directly settling government expenses for mainland-supplied goods and services in renminbi was a pragmatic move to mitigate exchange rate risks and cut transaction costs.

Chan stressed that renminbi offshore business was a unique competitive edge of Hong Kong as an international financial centre, adding that it would continue to grow.

“Our country’s foreign trade – imports and exports – accounts for about 14 to 15 per cent of the global total. Various countries around the world are currently encouraging transactions settled in their local currencies because costs are lower and exchange rate risks can be avoided,” he said.

“To a certain extent, this also helps diversify risk away from the US dollar. Therefore, some countries trading with us are using renminbi, such as oil purchases.

“We could anticipate that more foreign entities will hold renminbi. They will seek investment opportunities and need somewhere they can convert it into other currencies anytime.”