India is on the cusp of receiving significant foreign direct investment (FDI) from Hong Kong, particularly in thriving sectors such as tokenization, financial technology (fintech), and green finance. This strategic alignment stems from Hong Kong’s intent to leverage its sophisticated capital-raising capabilities to bolster India’s ambitious digital transformation and sustainability agendas. According to a report by The Economic Times, the collaboration between two major Asian technology hubs is set to foster a robust economic synergy, not just by broadening investment channels but also by encouraging Indian companies and skilled professionals to engage more deeply with Hong Kong’s fintech ecosystem.
King Leung, global head of financial services, fintech, and sustainability at Hong Kong’s investment promotion department, underscored India’s growing appeal as an FDI destination, driven by its vibrant and evolving business landscape. He projected acceleration in investments over the coming year in sectors where Hong Kong’s well-established capital markets offer strategic advantages. The relationship is reciprocal, as Hong Kong aims to attract Indian talent and businesses to fuel innovation in emerging fields like artificial intelligence (AI) and digital technologies. The inflow of Hong Kong investments is increasingly diversifying into sectors crucial to India’s rapid digital expansion and sustainable development goals.
Hong Kong’s role as a financial nexus is further exemplified by its burgeoning activity in asset tokenization. Mumbai, India’s financial capital, is advancing a framework poised to unlock approximately ₹50 trillion (around $566 billion) in idle capital through tokenization of assets. This development aligns closely with the Reserve Bank of India’s announced plans to introduce tokenization of financial assets and settlements leveraging its wholesale central bank digital currency (CBDC). Such moves could significantly enhance liquidity and capital utilisation across Indian markets, creating fertile ground for collaboration with Hong Kong’s established expertise in tokenized assets.
The Economic Times report also highlights that Hong Kong’s fintech ecosystem, hosting nearly 4,700 ventures across cutting-edge sectors like AI, healthtech, Web3, and fintech, presents rich opportunities for Indian startups and investors. India’s startup landscape is impressive, ranked as the world’s third-largest with over 100 unicorns, and is expected to contribute nearly $1 trillion to the economy by 2030, according to a KPMG white paper. This burgeoning ecosystem offers fertile terrain for bilateral investments and underscores the shift in India’s entrepreneurial landscape toward becoming a global innovation hub.
Green finance is another critical vector deepening the India-Hong Kong partnership. Hong Kong is a global leader in green bonds and loans, accounting for roughly 45% of such transactions in the Asia-Pacific region. This makes it an attractive locale for Indian companies seeking to raise capital to meet international sustainability standards. Hong Kong’s recent issuance of its third digital green bond, valued at about $1.3 billion and denominated in multiple currencies including the Hong Kong dollar, US dollar, euro, and Chinese yuan, showcases pioneering use of tokenized central bank money for settlement. This initiative, lauded by Eddie Yue, CEO of the Hong Kong Monetary Authority, facilitates interoperability across digital infrastructures by integrating tokenized CBDCs such as the digital yuan and e-HKD, setting a precedent for future digital finance innovation.
India’s growing export ties with Hong Kong also signal increasing economic integration. Merchandise exports from India to Hong Kong grew by over 26% to $2.62 billion in early 2024-25, spanning luxury goods, engineering products, and electronics. Re-export trade between India and China via Hong Kong further highlights the region’s role as a crucial trade hub, with volumes reaching approximately $12.59 billion in 2024.
Hong Kong is simultaneously intensifying its efforts to consolidate its position as a global fintech and tokenization hub. It has launched pilot projects such as Project Ensemble, which explores real-value transactions using tokenized deposits and digital assets, focusing initially on money-market fund transactions and treasury management. The Hong Kong Monetary Authority plans to advance its settlement systems to enable round-the-clock transactions with tokenized central bank money. Industry reports, including one from Boston Consulting Group, forecast that tokenization of real-world assets could skyrocket to $23.4 trillion by 2033, with banks expected to hold more than half of all tokenized assets by the decade’s end.
However, this rapid growth is not without challenges. Recent reports reveal that China’s securities regulator has advised domestic brokerages to pause real-world asset tokenization activities in Hong Kong, reflecting concerns over the offshore expansion of digital asset ventures. This move has impacted market sentiments, with shares of major brokerage firms dipping following the announcement. It illustrates the complex regulatory environment in which Hong Kong’s fintech ambitions are unfolding, especially given its unique position bridging Mainland China and global markets.
Moreover, Hong Kong is also easing regulations around virtual asset trading to enhance liquidity and competitiveness. The Securities and Futures Commission’s updated rules enable locally licensed platforms to share global order books with overseas affiliates, a significant shift aimed at integrating Hong Kong’s fintech market with international networks. This regulatory relaxation complements initiatives such as the tokenization pilot programs and highlights Hong Kong’s commitment to maintaining its edge as a leading digital asset and fintech centre.
In the realm of green finance, Hong Kong's leadership is further cemented by its role as the largest offshore venue for Chinese green bonds and its ongoing efforts to channel vast financial resources towards carbon neutrality goals. Industry experts have pointed to the tokenization of real-world assets as a powerful tool to drive innovation and stability in green investments, particularly in disruptive global financial climates.
Together, these developments indicate a deepening and multifaceted economic partnership between India and Hong Kong, anchored in technology, finance, and sustainability. As both regions navigate regulatory complexities and unlock new digital infrastructures, their evolving synergy could serve as a blueprint for regional integration and innovation-driven growth in Asia.
📌 Reference Map:
- [1] (CoinGeek) - Paragraphs 1-14
- [2] (Economic Times) - Paragraph 1-2
- [3] (Reuters) - Paragraph 10
- [4] (Reuters) - Paragraph 11
- [5] (Times of India) - Paragraph 11
- [6] (BTCC) - Paragraph 7
- [7] (Hong Kong Fintech) - Paragraph 13
Source: Noah Wire Services