HK eyes commodities finance hub amidst soaring green metals demand

FSDC urges market links and product expansion to boost competitiveness.

Hong Kong is aiming to become a regional centre for commodities finance and risk management, using its financial markets and proximity to Mainland China, according to a report by the Financial Services Development Council (FSDC).

The FSDC paper, Unveiling Hong Kong’s Potential: Prospective Growth in the Expanding Commodity Market, highlights rising demand for critical metals such as lithium, copper, nickel, cobalt, and rare earths. Growth is driven by the energy transition and expansion of low-carbon technologies across Asia.

Despite strong financial infrastructure, legal stability, and regional connectivity, Hong Kong’s physical commodity trading activity remains limited compared with peers including Singapore and Shanghai. The report identifies gaps in commodity exchanges, market depth for hedging instruments, and specialised talent in commodity finance and analytics.

To address these gaps, the FSDC recommends building an integrated commodity ecosystem. Measures include partnerships with global exchanges, expanding trade and structured finance products, and enhancing cross-border connectivity with Mainland China for settlement in both RMB and USD.

The report also highlights opportunities in green and sustainable commodities, including carbon credits and renewable energy certificates.

Targeted focus on energy transition metals and sustainable commodities, combined with Hong Kong’s capital markets expertise, could enable the city to connect Asian producers with global buyers while providing financing and risk management solutions.

Success will depend on regulatory coordination, infrastructure investment, and development of specialised talent to attract traders and investors in the evolving global commodity landscape, FSDC says.