The offshore foreign exchange market hopes to shake up the Lion City, and it is advisable to actively trade Asian and emerging currencies "to weather the storm and open the market."

Hong Kong aims to become a global fixed income and currency center, with the foreign exchange market being one of the key development areas. Currently, Hong Kong ranks fourth among global foreign exchange centers, trailing behind Singapore. Market participants believe that to surpass the Lion City and enter the top three global foreign exchange centers, more foreign exchange trading of Asian and emerging market currencies should be conducted. Scholars firmly believe that as the renminbi becomes increasingly internationalized, it is only a matter of time before Hong Kong surpasses Singapore.

This Year as the Fourth Largest Foreign Exchange Center Globally

According to the results of a survey published by the Bank for International Settlements every three years, Hong Kong will continue to be the fourth largest foreign exchange center globally by 2025, as well as the largest offshore renminbi business hub. In April of this year, the average daily trading volume of foreign exchange transactions in Hong Kong reached USD 883.1 billion, an increase of 27.2% compared to the same period three years ago; the average daily trading volume of renminbi foreign exchange transactions increased by 64.8% to USD 315.1 billion.

Wang Liangxiang, Managing Director of Zhenxiang Consulting, reflected on the development of Hong Kong's foreign exchange market over the past 20 years, stating that since the launch of offshore renminbi business in 2004, Hong Kong's focus has shifted more towards the renminbi, thereby reducing foreign exchange trading of currencies from Asia and other regions. There was a time when Hong Kong's foreign exchange market activity was above that of Singapore. He said, "In the global foreign exchange center rankings, London ranks first, which is hard to beat, New York second, and Singapore third." Hong Kong aims to become a global currency center, and to do so, it must first surpass Singapore, hence it should re-engage in foreign exchange trading of Asian and other emerging market currencies. This aligns with Hong Kong's efforts to join the Regional Comprehensive Economic Partnership and the increasing trade volume between China and emerging markets, as well as the trend of mainland enterprises going abroad. He suggested that Hong Kong's foreign exchange market should emulate the stock market's approach of "opening the market despite the storm."

Mak Chui Choi: Hong Kong Will Definitely Surpass Singapore

Mak Chui Choi, Associate Professor of Accounting, Economics, and Finance at Hong Kong Baptist University, stated, "Hong Kong will definitely surpass Singapore; it's just a matter of when!" Since the Hong Kong dollar is pegged to the US dollar, the exchange rate risk is lower than that of the Singapore dollar, and Hong Kong is the largest offshore renminbi market globally, with frequent trading between the Hong Kong dollar and the renminbi, as well as a large volume of cross trades between the US dollar and the renminbi. As the role of the renminbi becomes increasingly important and trading volume increases, it will help drive the trading volume of Hong Kong's foreign exchange market upward.

Related articles: Hong Kong activates bond market to attract retail investors, needs more platforms and lower entry fees "The market needs trading to be viable."