China’s NASDAQ?

All hype aside, there’s still a long way before the city’s financial market could become internationally recognised. For instance, the local bond market, which is still in the beginning stage, only represents a minimal share of the volume of nearby Hong Kong. 

The Chinese answer to Nasdaq in the United States? An Asian version of a robust, boutique financial centre like Luxembourg? Amid bold claims about the future of the city’s financial industry, there is still more work to be done. 

Prior to the visit of Chinese President Xi Jinping to the gambling enclave last month to attend the festivities of the 20th anniversary of the city’s handover, there have been news reports that the state leader would officially announce that Macau would set up the yuan-denominated securities market, an idea that had been first proposed in the outline document of the Guangdong-Hong Kong-Macau Greater Bay Area in early 2019. 

This has led to speculation that Beijing hopes to groom Macau to replace — or partially replace — Hong Kong as the region’s financial centre, given months of unrest and protest scenes in the nearby city. 

However, this vision has not materialised yet, with Mr. Xi keeping mum over the topic during his three-day stay in the gambling enclave. The city’s new Chief Executive, Ho Iat Seng, also noted that Macau “now has no conditions” to become a financial centre and has difficulties to attract investors because of a lack of relevant rules in the financial areas. In a recent media interview, the city’s top job even went further to say it is “impractical” to think Macau would replace nearby Hong Kong as a financial centre. 

Though Mr. Ho pours cold water on the enthusiasm of some, the government has been committed to pushing forward the development of the local financial industry in recent years as a means to diversity its gaming-dependent economy. In 2015, the authorities first proposed the city has to develop the so-called “featured financial industry,” which mainly focuses on financial leasing and wealth management. 

Minimal Share 

Besides, the government has also set its eyes on the development of the local bond market in recent times. Chongwa (Macao) Financial Asset Exchange Co. Ltd. (MOX) was established here in December 2018 by Nam Kwong Group, a Chinese state-owned conglomerate in Macau whose business empire extends from public transportation to utilities to hotels and tourism. MOX is known as the first financial institution in the territory to provide services of bond issuance, listing, registration, custody, trading and settlement. 

In its first year of operation, according to the company, thirteen institutions and companies from Macau and Mainland China have issued and listed 18 bond products via MOX, with the volume totalling over MOP 40 billion (US $5 billion). 

– Over MOP40 billion 
Total volume of bond products issued and listed via MOX in past year 

– RMB588.8 billion 
Macau’s yuan clearing volume in 2018 

“MOX has started from scratch in the first year, with the gradually expanding business scale, more diversified bond product portfolio, and increasing liquidity in the market,” the company noted in a statement. 

In nearby Hong Kong, the volume of its bond market totalled HK $3.56 trillion (US $457.1 billion) in 2018, placing it as the third-largest Asian bond market, and the scale of MOX was only equivalent to nearly 1.1 percent of the Hong Kong market. 


One of the high-profile debt issuances via MOX in the past year was the issuance of RMB 2 billion (US $285.7 million) debt securities by the Chinese Ministry of Finance in July, of which RMB1.7 billion was available to institutional investors for an annual interest rate of 3.05 percent for three years, with RMB 300 million for retail investors with a rate of 3.3 percent for two years. 

The ministry said at the time the debt issuance in Macau “is an importance measure to support the development of the featured finance of Macau and to expedite the sustainable development and appropriate economic diversifications of Macau.” 

The issuance would also “guide more entities to issue yuan-denominated bonds in Macau, as well as facilitating the development of bond market in the city,” the ministry added. 

Indeed, in the wake of the issuance of sovereign bonds, several state-backed and private entities opted for debt issuance in the gambling enclave, including the issuance of US $500-million in bonds by Industrial and Commercial Bank of China (Macau) Limited, the RMB 3-billion in bonds by Agricultural Development Bank of China, and the US $450-million in bonds by Zhuhai Da Heng Qin Investment Co. Ltd. 

New Financing Channel 

The latest example is the issuance of US $200 million in bonds with an annual rate of 3.7 percent by real estate conglomerate Zhuhai Huafa Group. According to MOX, 14 institutional investors have applied to subscribe in the Huafa bonds, with the value totalling US $728 million. 

Huafa noted in a statement the subscription results indicate that both local and overseas investors “are resolutely confident” in the Macau bond market and the prospects of the Zhuhai company. The Macau bond market provides an additional financing channel for Huafa, it added. 

Looking ahead, MOX said it would continue to “expedite the development of the Macau bond market, accelerate the innovation of financial products, and provide more professional, customised and personalised financial tools, thus allowing the featured finance of Macau to become another economic growth engine of the Guangdong-Hong Kong-Macau Greater Bay Area.” 

Lusophone Yuan Clearing Centre 

Developing a mature bond market not only helps expedite the city’s financial industry but also strengthens the city’s role as a yuan clearing centre for Portuguese-speaking countries, a position that had been designated by Chinese Premier Li Keqiang during his visit to the city in 2016. Providing more local financial products, like bonds, will increase the willingness of overseas parties to settle and transact with the Chinese currency, observers say. 

The Chinese central bank announced last month it has inked a three-year bilateral currency swap agreement of RMB 30 billion yuan with the Monetary Authority of Macau, in support of the city’s financial development, namely the yuan clearing business. 

According to global interbank messaging provider SWIFT, Macau ranked 12th in the world’s top yuan offshore clearing centres as of August 2019, accounting for 0.48 percent of the total offshore yuan transaction volume. Nearby Hong Kong remained the biggest yuan cleaning centre, representing over 76 percent of the total yuan transactions, with the United Kingdom and Singapore trailing behind. 

The latest data from the Statistics and Census Service also show the yuan clearing business volume of Macau in 2018 amounted to RMB 588.8 billion, down by 21.2 percent from 2017. The yuan clearing volume involving countries and regions along the “Belt and Road” initiative dropped 6.9 percent year-on-year, to RMB 286.5 billion.