Hong Kong’s onshore and offshore sustainable bonds market hit $25 billion in the first nine months of this year, slightly below last year’s levels.

The market is set for growth in the fourth quarter and beyond as interest rates fell, the Hong Kong Green Finance Association (HKGFA) said on Thursday. 

Huang Chaoni, executive vice-president of the HKGFA, attributed the dip to global economic uncertainties and high interest rates in 2023. 

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However, Huang, who is also a managing director and head of sustainable capital markets APAC at BNP Paribas, said she expected an uptick in issuance volumes in the coming months, as the Hong Kong Monetary Authority lowered its base rate by 50 basis points to 5.25 percent on Sept 19, matching the US Federal Reserve’s move due to the city’s currency peg to the greenback.

She also noted that private sector issuance now accounts for 80 percent of the market, up from 50 percent in 2023, marking a shift from last year when sovereign and quasi-sovereign entities dominated.

On carbon markets, Trace Wong Harris, executive vice president of the HKGFA, highlighted the importance of high-quality carbon credits in helping high-polluting enterprises to shave carbon emissions.

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She noted Hong Kong’s voluntary carbon trading market, launched in 2022, needs more concrete policies and regulations to spur demand.

The association noted the Hong Kong Special Administrative Region government unveiled a battery of measures this year to bolster its position as a global sustainable finance and green technology hub.

The initiatives include extending the Green and Sustainable Finance Grant Scheme to 2027 and implementing IFRS International Sustainability Disclosure standards for Hong Kong-listed companies by 2025. The government also plans to issue HK$20 billion ($2.57 billion) of green and infrastructure bonds for the current financial year ending in March 2025.

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The HKGFA will host its annual forum on Oct 9, focusing on “Financing Asia’s Net Zero Transition”, with over 1,500 attendees expected from the Hong Kong SAR, the Chinese mainland, and further afield. 

Founded in 2018, the association aims to position the city as an international green finance hub by boosting Hong Kong financial institutions’ access to green financing transaction deals in Hong Kong, on the mainland, and in economies involved in the Belt and Road Initiative. 

tianyuanzhang@chinadailyhk.com