---
title: "UBS's Deng Weishen: The government's first use of the foreign exchange fund for Beijing's infrastructure will help diversify and optimize the investment portfolio, reducing the need for further borrowing"
description: "UBS Investment Bank analyst Deng Weishen pointed out that the Hong Kong government has used HKD 150 billion from the foreign exchange fund for northern infrastructure projects for the first time, whic"
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/276977939.md"
published_at: "2026-02-26T03:23:33.000Z"
---

# UBS's Deng Weishen: The government's first use of the foreign exchange fund for Beijing's infrastructure will help diversify and optimize the investment portfolio, reducing the need for further borrowing

> UBS Investment Bank analyst Deng Weishen pointed out that the Hong Kong government has used HKD 150 billion from the foreign exchange fund for northern infrastructure projects for the first time, which helps diversify and optimize the investment portfolio and reduce the need for borrowing. He believes that Hong Kong has room to diversify risks by issuing more RMB-denominated bonds and enhance long-term growth potential. UBS maintains its 2026 real GDP growth forecast at 3.3%, above market consensus, and is focused on government spending and changes in the industrial cycle

UBS Investment Bank Senior Asia Economist Deng Weishen believes that Hong Kong maintains a robust net asset balance sheet, but has lagged behind other comparable economies in growth in recent years. Therefore, there is room for Hong Kong to finance capital expenditures through bond issuance to enhance long-term growth potential. Additionally, there is room to optimize the currency structure of bonds. Currently, RMB-denominated bonds only account for a relatively small portion of total debt. Thus, issuing more RMB-denominated bonds will help diversify risks and improve efficiency.

Regarding the government's plan to utilize HKD 150 billion from the Exchange Fund for the first time since 1984 for the Northern Metropolis and other infrastructure projects according to the Exchange Fund Ordinance, Deng Weishen stated that this net equity belongs to government assets and will fluctuate with market return cycles. Therefore, using part of the annual revenue in 2025 to support long-term growth potential will help diversify and optimize the overall government investment portfolio and reduce the need for further borrowing. The key focus in the future should be on the efficiency of these capital expenditures.

Deng Weishen stated that maintaining a growth forecast above market consensus, the government expects the actual GDP growth rate in 2026 to be in the range of 2.5%-3.5%. UBS maintains a 3.3% actual GDP growth forecast, which is at the upper end of the government's forecast range and higher than market consensus. Overall, the bank believes there is still upside risk based on the already higher-than-consensus growth forecast; future focus will be on the government's actual spending progress and potential industrial cycle changes. If the economy faces unexpected shocks again, he believes the government can still utilize resilient fiscal reserves to provide counter-cyclical support when necessary

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.