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Recently, a number of Hong Kong brokers have publicly or semi-publicly started to close the accounts of Chinese mainland investors, including some well-known brokers such as Futo Securities, Tiger Brokers and Huatai Securities. According to analyses of industry insiders, this current condition may be closely related to the Measures for the Administration of Securities Brokerage Business, which came into effect on February 28, 2023. The aim of the document is to standardize the development of securities brokerage businesses, maintain the market trading order, as well as protect the legitimate interests of investors. The all-round restriction of Hong Kong brokers to the investment channel of HK stocks will be a new challenge for both mainland investors and Hong Kong brokers. Under global financial weakness and liquidity shortage, there are three main factors to consider: achieving the global asset allocation of users in a secure, convenient, low-threshold and low-cost way; improving Hong Kong's stock market liquidity without the support of Chinese mainland users; attracting the flowing back of global talents and funds.
The Hong Kong stock market has been defined as low-value for years. However, with the strong liquidity support from two programs dubbed "Shenzhen-Hong Kong Stock Connect" and "Shanghai-Hong Kong Stock Connect", the total market value of Hong Kong securities market still ranks among the top 5 in the world with a volume of more than $6 trillion. (Data source: https://www.stockq.org/economy/cap.php)
Due to its unique positioning of "leaning back to the Chinese mainland and facing the world", Hong Kong, together with South Korea, Taiwan and Singapore, quickly rose to become the "Four Asian Giants" in the 1990s. But now, the Hong Kong stock market will again face the dilemma of lack of liquidity injection from Chinese mainland investors. Low turnover rate, high proportion of traditional industries, structural differentiation and some other problems will occur again, which may lead to low valuation expectations of Hong Kong-listed companies.
The original intention of a securities market is to increase the efficiency of capital use, expand the financing channels of enterprises, increase asset allocation modes for investors. Thus the supplying and demanding parties are able to realize value exchange, rights transfer and risk swap. In an efficient market, securities issuers, investors and brokers all play indispensable roles. When Chinese mainland customers are temporarily unable to invest in the Hong Kong stock market, it is essential for all participants and co-builders, including listed companies, brokers and the Hong Kong Stock Exchange, to find a new way for the future development of the stock market.
With the strong support for the Web3 industry in Hong Kong, MetaTdex has built an unprecedented meta-asset bridge, aiming to inject new vitality into the Hong Kong stock in a Web 3.0 financial method.
- Since the Financial Secretary of Hong Kong (Financial Services and the Treasury Bureau) officially issued a document titled "Policy Declaration on the Development of Virtual Assets in Hong Kong" on October 31, 2022, the way out of the Hong Kong Government's future Web3 development seems to have made its first appearance;
- On December 16, 2022, two BTC and ETH pegged ETFs of CSOP were listed.
- February 20, 2023, SFC: Individuals might be allowed to trade Bitcoin and Ethereum on SFC approved trading platforms;
- June 1, 2023: SFC-enacted virtual asset regulations and licenses would come into effect;
- The Hong Kong dollar-pegged stablecoin is expected to go public before the end of 2023.
Hong Kong's embrace of Web 3.0 is clearly a recognition of the liquidity value behind blockchain finance. There are more than 221 million crypto users worldwide (taking only four months for the growth from 100 million to 200 million), forming a huge virtual asset market with a 126 trillion market cap. If Hong Kong could be legally linked to the global stock market (market cap: over $124 trillion) and even the global bond market (market cap: over $126 trillion) via the blockchain technology, it would not only solve the liquidity dilemma of the single market, but also bring about big changes in the reshaping of assets.
From the frequent promotion of Web3 policies in Hong Kong, it is clear to see the Hong Kong government's potential support for the combination of the stock market and Web 3.0. In 2022, MetaTdex took the lead in proposing a goal ——“Innovation reshapes assets, compliance creates the future". TT-Stock, introducing Web 3.0 users into the Hong Kong capital market, will promote liquidity and conduct a win-win cooperation with Hong Kong. From the perspective of investment, Metatdex's meta-asset bridge provides a new way for global users to buy Hong Kong stocks. As a reshaping of the financial model, the transformation from traditional KYC-based security into blockchain-based trust will break through national or regional restrictions. MetaTdex sets up a model for crypto-stock interoperability. Building a digital bridge for global users to realize multi-asset allocation, MetaTdex will become a Web 3.0 pioneer in bringing liquidity into the stock market.
