Foreign Media: Hong Kong Seizes Advantage Over Singapore (SGX) as It Launches Trial Run of Gold Settlement System Today, Aiming to Become Regional Hub and Establish Pricing Foundation

The Hong Kong Gold Central Settlement System, supported by the HKSAR government and 11 financial institutions including Shanghai, commenced its trial operation today. The Chief Executive stated that in a world marked by geopolitical crises and economic uncertainty, this settlement system lays the foundation for building a gold trading ecosystem, benefiting global investors and capital seeking safe assets. The trial run gives Hong Kong a critical time advantage in its bid to become the Asia-based gold trading hub with pricing power, particularly as Singapore’s over-the-counter (OTC) settlement system is not expected to be operational until year-end.

The announcement of the official trial operation of the Hong Kong Gold Central Settlement System was made earlier today (7th) by the Chief Executive at the Hong Kong Fixed Income & Currency Summit and Bond Connect Forum. The system is capable of handling services such as gold storage, withdrawal, and OTC transaction settlements. Initial transactions involving mining companies, refineries, and multiple banks have already been successfully completed.

The system is further connected to the Shanghai Gold Exchange via the “Delivery Connect” mechanism, enabling participants to utilize their gold holdings for trading across both Hong Kong and Shanghai markets, thereby enhancing liquidity. Li Jiachao said that in light of these new opportunities, the Hong Kong Exchanges and Clearing Limited has resumed the USD-denominated gold futures contract, while Hong Kong is also considering launching a new RMB-denominated gold futures contract, backed by delivery support from the Shanghai Gold Exchange.

In terms of securing gold pricing authority, Hong Kong will collaborate with Shanghai and Bloomberg to launch the Hong Kong Gold Price Index “HAU,” designed for gold traded and settled in Hong Kong. The Chief Executive noted that HAU will lay the groundwork for Hong Kong to contribute to the global benchmark gold price. He also revealed that the HKSAR government is currently considering tax incentives for qualified institutions conducting gold trading and settlement in Hong Kong, aiming to establish an institutional-level gold trading market in the city.

Each Has Its Strengths: Hong Kong Benefits from Vast Domestic Consumer Market; Singapore Offers Neutrality and Stability

Amid escalating geopolitical tensions, gold is increasingly viewed as the optimal hedge against dollar risk, driving up investor demand. The Chief Executive explicitly stated that if gold is the world’s safe haven, then Hong Kong is its safe harbor.

Whether the Chief Executive’s ambitious vision can materialize depends on how aggressively Singapore advances its own international gold trading hub ambitions. Earlier this month, Singapore’s Monetary Authority announced plans to establish the Singapore Exchange’s OTC gold clearing system by year-end, involving six major international banks offering gold storage and financial derivatives services. Additionally, the plan includes gradually expanding interbank trading starting next year. Deputy Prime Minister and MAS Chairman Mr. Yeo Cheow Tong emphasized that the initiative aims to complement traditional global centers and regional markets like Hong Kong.

Overall, Hong Kong’s key advantage lies in China—the world’s largest gold consumer market—providing direct access to mainland China’s substantial physical gold demand. This strategic position allows Hong Kong to take early action in launching the gold clearing system trial and striving to build a global gold pricing benchmark. However, due to the unpredictable nature of U.S.-China relations, Hong Kong faces relatively higher geopolitical risks for investment, which may lead some international investors or hedge funds to question the independence of their capital and assets.

Singapore’s strength stems from its internationally neutral status, attracting numerous multinational corporations, family offices, and foreign central banks choosing to store gold there. Its alliance with six major international banks—including JPMorgan Chase and Deutsche Bank—also brings high international credibility. Nevertheless, when it comes to final physical gold consumption scale and geographic reach, Singapore lags behind Hong Kong, which enjoys direct access to the vast Chinese mainland market.

Source: rfi

Original article: toutiao.com/article/1870046877307913/

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