Hong Kong eyeing gold expansion and Northern Metropolis vaults to cement hub status

Hong Kong is looking to expand its gold holdings and establish vaults in the Northern Metropolis to reinforce its position as a global financial hub, according to authorities. Financial Secretary Paul Chan Mo-po revealed that the city is not under pressure to raise interest rates following a US rate increase, but will continue to closely monitor the situation.

Chan also announced a proposal to increase the Exchange Fund's gold portfolio, which would bolster Hong Kong's role in the precious metal and commodity trading sector. The plan includes developing derivative services and establishing connections with Shanghai, further enhancing Hong Kong's financial ecosystem. Meanwhile, the city's leader, John Lee Ka-chiu, proposed the creation of London Metal Exchange-approved vaults in the Northern Metropolis, aiming to promote clustering of physical delivery, financing, and risk management services.

These vaults, however, would not compete with the existing 1,000-tonne-class warehouse at the Hong Kong International Airport on Lantau Island, as demand for such facilities is far greater than the airport's capacity. The government has earmarked industry land across new development areas in the Northern Metropolis to meet commodity warehousing demand.

Additionally, Hong Kong is planning to settle government expenditures in yuan in suitable scenarios and issue more renminbi-denominated bonds, all contributing to the city's role as the world's largest offshore renminbi trading hub.