Hong Kong's Stablecoin Framework May Boost Mainland Firms' Global Competitiveness

GF Securities has highlighted the potential impact of Hong Kong's proposed regulatory framework for stablecoins, suggesting that it could offer a compliant pathway for mainland companies to issue RMB-pegged stablecoins through Hong Kong. This move is expected to facilitate cross-border trade and investment, thereby enhancing the competitiveness of mainland companies in the global market and attracting additional funds into A-shares. However, the analysts note that the current harsh policy environment for virtual currencies makes it unlikely that large-scale incremental funds will enter A-shares in the near future.

In the short term, the introduction of stablecoins in Hong Kong is anticipated to bring structural opportunities to the stock market. Sectors such as digital currency, cross-border payments, blockchain, and Real World Asset Tokenization (RWA) are expected to benefit from this development. Stablecoins could also serve as a strategic tool for the United States to defend the status of the dollar, potentially alleviating some of the selling pressure on the dollar and U.S. bonds. Nevertheless, the limited scale of stablecoins and intensified competition may constrain the short-term boosting effect on the dollar and U.S. bonds.