HKMA, SRF team up for 15b yuan BRI fund

Hong Kong Monetary Authority will work with the Beijing-backed Silk Road Fund to form a Belt and Road investment platform, in which as much as 15 billion yuan (HK$16 billion) will be injected.

It may signal greater support that Hong Kong is getting from the central government as the SAR seeks to broaden its partnership with countries under the BRI, especially Southeast Asia and the Middle East, and to strengthen its status as an international financial centre.

With this specific fund, HKMA and SRF will explore onshore and offshore investment opportunities and provide financial support to the Belt and Road Initiative, according to a statement yesterday.

In the first phase, both sides will jointly set up a BNR HK Flagship Impact Fund, with a total capital of up to US$1 billion (HK$7.8 billion) or equivalent in yuan. The fund will primarily invest in projects related to energy transition and infrastructure, and environmental, social and governance.

These areas are what SRF covers since it has invested in mid and long-term projects related to infrastructure, energy resources, production cooperation, financial cooperation, sustainable investment in SEA, South Asia, Central Asia, West Asia, North Africa and Europe.

Established in 2014, SRF is a China Government Guidance Fund, jointly set up by the State Administration of Foreign Exchange, China Investment Corporation, Export-Import Bank of China and China Development Bank.

SRF now manages US$40 billion plus 180 billion yuan, after an additional injection of 80 billion yuan was announced by President Xi Jinping at the opening ceremony of the third Belt and Road Forum in Beijing.

The cooperation was marked by a signing ceremony yesterday, attended by People's Bank of China governor Pan Gongsheng, Hong Kong's Financial Secretary Paul Chan Mo-po and HKMA Chief Executive Eddie Yue Wai-man.

On Monday, HKMA signed a memorandum of understanding with China's state planner at the forum to facilitate cross-border financing activities of mainland enterprises and the development of offshore bond market.

Meanwhile, China cut US Treasury holdings for the fifth consecutive month in August to a fresh 14-year low of US$805 billion, while the yuan's share in global payments hit a record 3.7 percent in September. However, the onshore yuan weakened by 54 basis points to 7.315 per US dollar yesterday, a fresh one-and-a-half-month low.