Building a World Top Green and Sustainable Bond Hub

20 Hong Kong’s Transition Towards a Green and Sustainable Finance Center: Building a World Top Green and Sustainable Bond Hub The HKEX points out that Hong Kong’s green bond certification scheme has been recognized by the international market, and thus has filled a gap in mainland offshore green bonds issuance and helped increase its transparency. The series of measures to accelerate Renminbi’s international flow, such as RQFII, Mainland-Hong Kong Mutual Recognition of Funds, Bonds Connect and so on, greatly contributes to the flourishing of Hong Kong’s bond market. The Hong Kong Quality Assurance Agency (HKQAA) can provide a high-quality certification service with the government’s incentives and subsidies. Meanwhile, Hong Kong is also innovative in being a sustainable finance platform, as the setting up of the Sustainable and Green Exchange (STAGE) marks the first-of-its-kind platform in Asia. These policies and actions have attracted issuers and investors to choose Hong Kong for green bonds issuance and listing. 2.3 Becoming a Green and Sustainable Bond Hub is Strategic for Hong Kong’s Transition Towards the Green and Sustainable Financial Center Despite the aforementioned advantages, becoming a green bond hub is strategically urgent for Hong Kong. In 2019, offshore green bonds took up 22% of the total green bonds issued by China. This percentage dropped to 19% in 2021 and 10.9% in 2023. Chinese green bonds’ listing volume on the HKEX also showed a decreasing trend from 53% in 2019 to 46% in 2021 and 43% in 2023. Although the HKEX is the largest trading venue for mainland offshore green bonds, its market share has decreased since 2019, and is facing fierce competition. Over the past decade, both Singapore and Hong Kong have consistently been the top two choices for listing Asian international bonds. Cumulatively, Singapore accounts for 63% of the total Association of Southeast Asian Nations (ASEAN) issuance, making it the clear leader in the region. Developing the green and sustainable bond market and increasing bond listing of Hong Kong would enhance the city’s competitiveness among Asian and international financial centers. There is also space for the growth of China offshore green bonds in which Hong Kong should play a role. Growing this market would help Hong Kong consolidate its status as the principal platform in arranging and listing Chinese green bonds.