Hong Kong and Shanghai Agree to Boost Financial Cooperation in 2024

The Hong Kong Special Administrative Region (HKSAR) and Shanghai have agreed to further strengthen financial capabilities of both cities. Representatives from the governments, financial regulators, and exchanges of Hong Kong and Shanghai met on April 25, 2024 to discuss deepening financial ties.

Key areas of focus included the latest developments in the China (Shanghai) Pilot Free Trade Zone, cross-boundary Renminbi business, securities, futures, insurance, financial technology (fintech), green finance, and talent exchange. Both sides committed to continuously enhancing mutual market access programs such as the Shanghai-Hong Kong Stock Connect, Bond Connect, and Swap Connect.

"We will work on expanding the scope of eligible products under Stock Connect, such as equity exchange-traded funds and real estate investment trusts," said Ashley Alder, CEO of Hong Kong's Securities and Futures Commission. "Collaboration will also focus on implementing newly announced measures and exploring further cooperation between securities markets."

On the insurance front, Hong Kong and Shanghai agreed to facilitate exchange and cooperation on issues like risk management of Belt and Road projects, captive insurance, and insurance-linked securities. Green finance was another priority, with both cities pledging to strengthen cooperation on product development, services, and innovation in this area.

Why this matters: The enhanced cooperation between Hong Kong and Shanghai, two of China's leading financial hubs, will further increase their competitiveness on the global stage. It also aligns with China's broader efforts to internationalize its financial markets and promote the use of the Renminbi.

Fintech emerged as another key area of collaboration, with Hong Kong and Shanghai agreeing to enhance exchange and cooperation among fintech enterprises. The Financial Services and the Treasury Bureau of the HKSAR government and the Shanghai Financial Regulatory Bureau will take the lead in holding regular meetings to advance financial cooperation between the two cities.

"Hong Kong and Shanghai are uniquely positioned to complement each other's strengths," said Christopher Hui, Hong Kong's Secretary for Financial Services and the Treasury. "By working together, we can create a more vibrant and interconnected financial ecosystem that benefits both cities and supports China's continued economic growth."

Key Takeaways

• Hong Kong and Shanghai agreed to deepen financial cooperation in various areas.
• Planned to expand eligible products under Stock Connect, Bond Connect, and Swap Connect.
• Collaboration on insurance, green finance, and fintech were also prioritized.
• The enhanced cooperation aims to increase the cities' global competitiveness.
• Cooperation aligns with China's efforts to internationalize its financial markets and promote the Renminbi.