Hong Kong is on track to develop as an Islamic finance centre in North Asia, with some companies considering issuing sukuk bonds to help Middle Eastern capital flow into the Greater Bay Area, according to bankers and the city’s financial secretary.

“We have received a rising number of inquiries from companies about issuing sukuk bonds in Hong Kong,” said David Yim Sau-king, head of debt capital markets for Greater China and North Asia at Standard Chartered Bank, at a summit on Monday. “We hope the inquiries may turn into transactions in future.”

With “world-class financial market infrastructure and deep capital markets”, Hong Kong was well suited to act as a conduit for Islamic capital into mainland China, he said during a panel discussion at the summit, which was organised by the Hong Kong General Chamber of Commerce (HKGCC) and the Federation of Hong Kong Industries.

Financial Secretary Paul Chan Mo-po said that the city had a legal framework to support the issuance of sukuk and other sharia-compliant instruments, adding the government issued over US$3 billion in sukuk a decade ago.

In November 2023, Hong Kong listed Asia’s first exchange-traded fund (ETF) that tracks the largest companies in Saudi Arabia, while an ETF that tracks sukuk government bonds was listed earlier this year, Chan said. Last year, two Hong Kong stock ETFs were listed in Saudi Arabia.

“Later this month, I will lead a delegation to Saudi Arabia, bringing together a strong team of Hong Kong and mainland companies in sectors such as artificial intelligence, biotech, fintech, green energy and more,” Chan said. “As a leading international financial centre, Hong Kong is well positioned to support the growth of Islamic finance and cross-border financial products.”