Hong Kong bond markets, yuan issuance to expand in 2026 under HKMA, SFC road map

Core Insights - Hong Kong is projected to experience an increase in bond issuance across various currencies in 2026, driven by heightened demand for non-US dollar assets amid geopolitical tensions and government initiatives aimed at strengthening the city's capital markets [1] Group 1: Government Initiatives - The Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) launched a blueprint in September to promote the local bond market by expanding yuan-linked products and broadening the investor base for fixed-income offerings [2][7] - Measures such as the launch of the cross-border repo business were implemented at the end of September, with further initiatives expected in 2026, including the automation of collateral management for repo transactions starting February 2 [3] Group 2: Market Growth and Trends - The Hong Kong bond market is anticipated to continue its growth in 2026 following strong development over the past two years, with significant issuers including the Airport Authority Hong Kong, Urban Renewal Authority, MTR Corp, Hong Kong Mortgage Corp, and the Hong Kong government [6] - Bond issuance has become more diversified, with bonds denominated in Hong Kong dollars, yuan, and US dollars, attributed to government promotion and the introduction of Bond Connect, which attracts more issuers to Hong Kong to access mainland investors [6] - As of November, Hong Kong dollar bond issuance reached a record HK$331 billion (US$42.5 billion), representing a nearly 37% increase compared to the full-year total of HK$242 billion in 2024 [7]