With new security laws in place, the third policy address from Chief Executive John Lee Ka-chiu focused on economic reform. He set out an array of measures to consolidate Hong Kong’s status as an international financial hub.
They reflected both rivalry and long-term strategy. An example is the goal of building an international gold and commodities trading market.
Hong Kong has lost much of its historical glitter as a gold trading market to Singapore. Lee is determined to restore it, quickly. He went on air on Thursday to say this could be a game changer for the economy, especially given the unique position of the city as a financial hub for mainland businesses.
But it must move quickly as competition heats up, with Singapore’s recent opening of a 500-tonne gold depository, compared to Hong Kong’s 150-tonne depositary, with another on the drawing board.
Lee announced the plan to bolster the city’s status as a global financial hub, one of three areas mandated by Beijing, alongside maritime and trade. Hong Kong is playing catch-up with Singapore, but it will be an option for investors hedging their bets by storing gold outside Europe or London to spread perceived geopolitical risk.
The potential for commodities storage is also huge. The city’s stock exchange owns the London Metal Exchange, which has the room to store commodities.
Expanding into Hong Kong would not only provide a significant boost to trading volumes on the metal exchange, but also open the door to the mainland.