Hong Kong poised for greater role in Islamic finance
Hong Kong is on track to develop as an Islamic finance centre in North Asia, with some companies considering issuing sukuk bonds
HONG KONG, China (MNTV) – Hong Kong is on track to develop as an Islamic finance centre in North Asia, with some companies considering issuing sukuk bonds to help Middle Eastern capital flow into the Greater Bay Area, reports SCMP.
“We have received a rising number of inquiries from companies about issuing sukuk bonds in Hong Kong,” said David Yim Sau-king, head of debt capital markets for Greater China and North Asia at Standard Chartered Bank. “We hope the inquiries may turn into transactions in future.”
With “world-class financial market infrastructure and deep capital markets”, Hong Kong was well suited to act as a conduit for Islamic capital into mainland China, he said during a panel discussion organised by the Hong Kong General Chamber of Commerce (HKGCC) and the Federation of Hong Kong Industries.
Financial Secretary Paul Chan Mo-po said that the city had a legal framework to support the issuance of sukuk and other sharia-compliant instruments, adding the government issued over $3 billion in sukuk a decade ago.
In November 2023, Hong Kong listed Asia’s first exchange-traded fund (ETF) that tracks the largest companies in Saudi Arabia, while an ETF that tracks sukuk government bonds was listed earlier this year, Chan said. Last year, two Hong Kong stock ETFs were listed in Saudi Arabia.
“Later this month, I will lead a delegation to Saudi Arabia, bringing together a strong team of Hong Kong and mainland companies in sectors such as artificial intelligence, biotech, fintech, green energy and more,” Chan said.
“As a leading international financial centre, Hong Kong is well positioned to support the growth of Islamic finance and cross-border financial products.”
Standard Chartered has been helping customers issue sukuk around the world, including the Hong Kong government-issued sukuk 10 years ago.
“Back then, the Hong Kong market was new to Islamic finance, which was why no company followed the government to issue sukuk,” Yim said. “But now, with many government roadshows and promotions in the Middle East and Asia, the timing is right for companies to consider issuing sukuk in Hong Kong.”
HKGCC chairwoman Agnes Chan Sui-kuen said the global Islamic economy is a powerhouse of growth, driven by the world’s Muslim population of over 2 billion people, accounting for over 25% of the global population.
HSBC Asia-Pacific deputy chairman David Eldon, who has nearly six decades of experience in the Middle East, said Hong Kong had potential in Islamic finance. “Given that there are more Muslims in the Asia-Pacific than anywhere else, and given Hong Kong’s growing connection to and collaboration with markets in the Middle East, we are clearly well positioned to become an Islamic finance hub,” he said.
Double-digit growth last year across all three core sectors of Islamic financial services – banking, capital markets and insurance – opened up opportunities for Hong Kong, but the city also faced challenges in taking the lead in this sector, Eldon said.
“One obvious challenge is competition,” he said. “Multiple other financial centres are also keen on expanding their Islamic business and are actively pursuing related regulatory, market development and digitalisation initiatives.”
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