Hong Kong’s Mandatory Provident Fund (MPF) should expand its investment options to include alternative assets and infrastructure, according to a report released by the Financial Services Development Council (FSDC) on Tuesday. The council also recommended that the city attract more long-term capital from mainland China’s pension funds and insurance companies to invest globally through Hong Kong.
The MPF, Hong Kong’s compulsory retirement savings scheme, currently holds assets worth HK$1.67 trillion, primarily invested in stocks, bonds, and bank deposits. The FSDC report suggests diversifying these investments by allowing a portion of MPF funds to flow into long-term, less liquid asset classes. Executing such reforms could align with the interest expressed by mainland "patient capital," which seeks overseas opportunities to diversify portfolios and improve returns.
FSDC executive director Rocky Tung Yat-ngok highlighted the appetite among mainland investors to participate in foreign markets using a variety of currencies, including the yuan. Tung emphasized the importance of developing additional long-term fixed-income products and other instruments to meet demand from these institutional investors.
In addition to investment diversification, the report called for reforms to streamline listing and fundraising procedures, reducing the time and costs involved. The FSDC proposed implementing a corporate rescue framework to facilitate the restructuring of financially distressed companies. These measures are part of a broader effort to boost Hong Kong’s competitiveness as an international financial hub.
The report, based on feedback from over 600 market participants, comes ahead of the expected release of Chief Executive John Lee Ka-chiu’s first five-year plan for the city next Wednesday. The FSDC, a government-supported think tank, regularly provides policy advice aimed at enhancing Hong Kong’s financial ecosystem.
Andrew Wei, vice-chairman of the FSDC, described the report as a strategic roadmap focused on improvements across five key areas: issuers, investors, intermediaries, financial instruments, and infrastructure—collectively referred to as the “five Ts.” Wei stressed that developing an open and interconnected market environment would strengthen Hong Kong’s role as a global capital gateway.
Among other recommendations, the council advised expanding initiatives like the Wealth Management Connect and ETF Connect schemes, as well as encouraging greater issuance of bonds denominated in Hong Kong dollars and yuan. The report also urged a reevaluation of the professional investor classification to include digital assets held with Securities and Futures Commission-licensed platforms.
Benjamin Hung Pi-cheng, chairman of the FSDC, acknowledged the need for ongoing reforms to ensure the city can capitalize on emerging opportunities linked to geopolitical challenges. The council also expressed intentions to support Hong Kong’s approximately 600 brokerage firms through development programs and industry events.
This latest report builds on earlier recommendations made in December, which focused on attracting more international listings to Hong Kong’s stock market. Together, these proposals reflect the council’s broader vision to maintain and expand the city’s status as a premier global financial center.