SFST's opening remarks at LME Asia Metals Seminar 2023 (English only)
16.5.2023

Following is the opening remarks by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, at the LME Asia Metals Seminar 2023 today (May 16): Laura (Chairman of Hong Kong Exchanges and Clearing Limited (HKEX), Mrs Laura Cha), Gucho (HKEX Chief Executive Officer, Mr Nicolas Aguzin), John (London Metal Exchange (LME) Interim Chairman, Mr John Williamson), Matthew (LME Chief Executive Officer, Mr Matthew Chamberlain), distinguished guests, ladies and gentlemen, Good morning to you all. After three years of meeting everyone through the screen, we finally see you all returning to this flagship event in Hong Kong, which comes just in time to celebrate its 10th anniversary. Not only for this event, the past few years were neither the best time for the trading of commodities. In particular for metals, the pandemic and recent interest rate hikes had triggered declines in prices and trading volume, mainly due to a weakening economy and consumer demand. Both short and long term supplies were also disrupted by mine closures and a wave of capital spending cuts in the mining sectors. While the reopening of the Mainland economy and the post-pandemic industrial growth in western economies helped lift market sentiments, the uncertainty in global economy forecast due to geopolitical tension and monetary tightening had outweighed the positive effects in recovery, rendering the metal complex ended in red last year. This does not mean we should be entirely pessimistic about the outlook. Indeed, those headwinds begin to soften with our country resuming normalcy in full. Our country continues to be a leading consumer in metals &ndash; from aluminium, copper and zinc in the construction industry, to nickel and lead widely used in manufacturing. The post-COVID recovery in the Mainland is now on track with an uptick in consumer spending, which could be reflected by an impressive 4.5 per cent growth in Gross Domestic Product (GDP) in the first quarter, better than 2.9 per cent in the previous quarter and exceeding market expectation. Although a rather modest GDP growth target at "around 5 per cent" was set for 2023, the market has already raised the growth forecast. In addition, the next five years will witness a good start of our country to embark on the new journey of building a modern socialist country in all respects. It is aimed to make breakthroughs in promoting high-quality economic development and make major progress in creating a new pattern of development and building a modernised economy. These will bring new opportunities and create new development frontiers, thereby stimulating consumption and production. Of course, there are still things that we need to be wary of. According to the World Bank's forecast, the global economic outlook remains uncertain amid financial sector turmoil and growth would be highly fragmented. At worst, China will be the only country to record acceleration in growth this year. High inflation is sticking around at the moment. Geopolitical tension remains a live issue, which may still be the stumbling blocks for all financial markets to thrive. So &ndash; what course will metal trading follow? I have no definite answer for you, but I am sure the ensuing panel discussions that bring together the most knowledgeable and influential industry heavyweights should be able to shed light on the market outlook, so let's stay tuned and be inspired! Among all the twist and turns we may face along the path, one thing I am certain about is that energy transition and green agenda will be defining the future of metal trading. Combating climate change has become a common interest across the globe. Needless to mention, our country is a strong believer to pursue green and low-carbon development. Such determination is underscored by its target to have carbon dioxide emissions peak before 2030 and achieve carbon neutrality before 2060 in the 14th Five-Year Plan. Turning to Hong Kong, we are working closely with our motherland to pursue these goals. Indeed, we have an even more ambitious target to cut our carbon emission by half before 2035 and achieve carbon neutrality before 2050. To this end, green and sustainable finance tops our policy agenda and we just have so much to offer. You don't need to look far but our green bond figures. In 2022, the volume of green and sustainable debts arranged or issued in Hong Kong increased by over 40 per cent from 2021 to reach over US$80.5 billion, among which the volume of green and sustainable bonds arranged in Hong Kong accounted for one-third of the Asian market. A spectrum of green products also have chosen Hong Kong to make their world's debut, including the Asian Green Bond ETF, Green Retail Certificate of Deposit and offshore ESG A-share ETF &ndash; you name it. With green financing needs in Asia alone reaching US$66 trillion over the next three decades, the opportunities presented to Hong Kong will only be boundless. Private-sector aside, our Government Green Bond Programme also yielded very positive results. Since 2019, near US$16 billion Government green bonds have been issued, covering US dollar, Euro, Renminbi and Hong Kong dollar tranches in multiple tenors, setting important benchmarks for potential issuers in Hong Kong and in the region. Just three months ago, we foreran the market and issued a tokenised green bond totalling $800 million, the first of its kind issued by a government globally. What will these be relevant to our focus of today, metals? As the world strives to reduce greenhouse emissions, there will be a natural energy transition towards renewables and electric vehicles (EVs). Notably, industry research indicated one fourth of the cars sold in our country were EVs, and its sales were expected to reach over 8 million this year. And yes, these low-carbon technologies rely on a handful of key metals like nickel, lithium, cobalt and manganese which may be of little-use to date. And surely, such opportunity is one that LME will never give a miss. LME suite of metals is fundamental to the EV evolution, and key battery metals are already trading on its platform. To take aim at booming EV market, I note that LME has been offering new contracts such as LME Cobalt and Lithium Hydroxide CIF in recent years to help producers, consumers and investors for price discovery and hedging. Also, following the successful launch of LMEpassport in 2021, it is exciting to learn that this digital credential register has continued to gain traction in terms of users, sustainability metrics and standards disclosed. Just last month, over half of LME brands listed had voluntarily input a range of ESG credentials and value-added information related to sustainability, further propelling the development of EV batteries. I am sure another very enlightening panel discussion will feed you all with more insights on the interplay between carbon agenda and metals markets. Before closing, I would like to express my sincere gratitude to the HKEX again for organising the LME Asia Week 2023, and to all of you for your participation. May I wish you all a rewarding day, and the best of business for the time to come. For those coming from overseas, enjoy and make the most out of your stay in Hong Kong. Thank you.