Hong Kong considers new offshore yuan venture fund for tech, emerging industries

Hong Kong is considering launching a new offshore renminbi venture fund to channel capital into cutting-edge technology and emerging industries while supporting the internationalisation of the yuan, the finance chief has said. The initiative would align with the nation’s latest five-year plan, which calls on Hong Kong to enhance its role as an international financial hub and expand its offshore renminbi business. “We are actively considering establishing a new offshore renminbi venture capital fund,” Financial Secretary Paul Chan Mo-po wrote in his weekly blog on Sunday. “This will help channel and leverage offshore renminbi capital into cutting-edge technology and emerging industries, while supporting the steady development of renminbi internationalisation.” Such a move sought to build on the growing convergence of artificial intelligence and finance, Chan said. He highlighted the virtuous cycle in which innovation and technology (I&T) and finance supported each other’s growth and injected momentum into high-quality economic development. “Hong Kong has invested heavily in innovation and technology, and this effort is transforming into a new driving force for economic growth,” Chan said. “However, this effort must be intensified and accelerated.” He noted that the Northern Metropolis megaproject, with its integrated “research and development-commercialisation-mass production” layout, could serve as fertile ground for the I&T ecosystem in Hong Kong. The megaproject aims to turn 30,000 hectares (74,132 acres) of land near the border with mainland China into a technological and economic hub. The government also plans to inject further capital into the Hong Kong Investment Corporation (HKIC), the city’s wholly owned investment vehicle, which currently manages HK$62 billion (US$7.9 billion) in starting capital. As of March, the HKIC had invested in more than 200 projects, spanning biotechnology, health technology, green technology and new energy. Ten of these companies are listed on the city’s bourse, with another 30 having applied or preparing to list, according to Chan. In this year’s budget, the government outlined plans to enhance Hong Kong’s competitiveness as an offshore yuan hub. Efforts include offering a wide range of yuan-denominated investment products, regularly issuing renminbi bonds, attracting “high-quality issuers” to offer yuan notes and bringing more cross-border yuan transactions to the city. Hong Kong already handles more than 75 per cent of offshore renminbi settlement. Lawmaker Rock Chen Chung-nin, executive director of private equity investment firm Acuity Capital Partners, said the proposed fund would align with the national strategy to cement Hong Kong’s role as an offshore renminbi hub. However, Chen noted that most funds and corporate investments in the city were currently denominated in Hong Kong or US dollars. The new fund would likely require creating a class of shares in renminbi and making related regulatory adjustments, he said. “The government designated several cutting-edge sectors in the Northern Metropolis, such as AI, biotechnology and big data. The fund must focus on these areas,” Chen said. He said that the fund could be managed by the HKIC, which could diversify its capital sources rather than relying solely on government injections. “For example, the government could inject 1 billion yuan [US$148 million] or 10 billion yuan as a seed fund,” Chen said. “It could then raise additional offshore renminbi capital from the market and investors worldwide … It would create a leveraging effect.” Economist Simon Lee Siu-po said he expected the proposed fund to boost renminbi use and attract innovative mainland projects to Hong Kong by providing an alternative financing source. The fund could target start-ups in technology, AI, fintech, biochemistry and medicine, and especially projects with the potential to expand globally, he said. Separately, Chan said Hong Kong’s April retail sales figures, due to be released this week, were expected to show a robust increase, marking the 12th consecutive month of growth. He pointed to technological breakthroughs and product and design innovations, which had driven up investment and sales. Chan also highlighted a recent Boston Consulting Group report showing Hong Kong had overtaken Switzerland to become the world’s largest cross-border wealth hub, describing it as global capital’s “vote of confidence” in the city’s system and investment environment.

Hong Kong considers new offshore yuan venture fund for tech, emerging industries

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Initiative would build on AI and finance convergence while supporting yuan internationalisation, finance chief Paul Chan says

Initiative would build on AI and finance convergence while supporting yuan internationalisation, finance chief Paul Chan says