In a blog post today (Feb. 16), the Financial Secretary, Paul Chan, emphasized that accelerating the development of the Northern Metropolis is the key for Hong Kong to grasp the opportunities brought about by technological changes, and said that the progress of the Northern Metropolis project will not be constrained by the public finance situation through the issuance of government bonds for financing.
Chan said that in order to seize the opportunities brought about by the rapid development of cutting-edge technologies, the government needs to accelerate the construction of the Northern Metropolis, provide sufficient space and infrastructure to attract technology enterprises to set up in Hong Kong, and vigorously promote the related economic activities, and Hong Kong has the conditions and ability to appropriately increase the issuance of bonds, and flexibly utilize the market forces. In contrast, Hong Kong's current ratio is only about 9.3%, and even if it increases slightly in the future, it will still be far below that of other advanced economies, and is at a healthy level.
Chan emphasized that bond issuance is for investing in the future and will not be used for daily expenses. With the gradual completion of some infrastructure projects, the demand and scale of bond issuance in the future will be reduced accordingly. On the other hand, the economic activities and industrial development driven by infrastructure investment will bring more new development opportunities and tax revenue to Hong Kong. The issuance of longer-term bonds to support longer-term projects will also enable the cash flow tenure to match the needs of the projects.
Citing the year 2024-25 as an example, Chan said that the institutional investors' portion of the green bonds and infrastructure bonds issued by the government had recorded a subscription of nearly three times to seven times, reflecting the market's confidence in Hong Kong's long-term development. Many insurance companies or capital management organizations have also reflected that they hope the government will issue more bonds with different maturities and denominated in different currencies, which will also help establish a better yield curve to provide reference benchmarks for other issuers and promote the development of Hong Kong's bond market, which is a multi-purpose endeavor.
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