Hong Kong is positioning itself as a leader in sustainable finance and is set to launch a roadmap this year to improve climate disclosures. The Financial Services Development Council, Friends of the Earth (HK), and the China Sustainable Investment Forum recently held a forum to discuss sustainable finance. The Securities and Futures Commission emphasized the importance of Hong Kong adhering to international standards to boost investor confidence. The Hong Kong Monetary Authority has also released a one-stop information platform for small- and medium-sized enterprises to compare lending services offered by banks. Retail banks in Hong Kong have implemented real-time monitoring to prevent funds from being deposited into fraudulent accounts, successfully stopping $2.3 million from being deposited into such accounts [053c86fe].
The size of the sustainable bond market in East Asia reached $4.3 trillion by the end of last year. The sustainable bond market in the ASEAN+3 region continues to expand, reaching $805.9 billion by March 2024. The local currency bond market in East Asia showed resilience, expanding by 1.4% quarter-on-quarter despite challenges such as higher bond yields and substantial bond outflows due to delayed US Federal Reserve rate cuts [2d150723].
Global issuance of sustainable bonds rose by 36% in Q1 2024 to $281 billion, with the green bond segment leading the way with $169 billion worth of new issue activity. Moody's Investors Service maintains its full-year 2024 sustainable bond issuance forecast of $950 billion. The improving cost competitiveness of green technologies and the proliferation of green industrial policies and regulatory pressure on companies to decarbonize are driving investment and underpinning sustainable bond issuance. Sovereign sustainable bond issuance reached $59 billion in Q1, and governments are increasingly using green bonds to finance their own sustainable investments. The proliferation of green disclosure standards is also supporting new issue activity [053c86fe].
Policy and regulatory developments, such as advancements in XBRL disclosures in Japan and the development of taxonomies for sustainable finance, are enhancing market transparency and efficiency in East Asia. These developments, along with the emphasis on sustainable finance, robust policy frameworks, and market transparency, will be key to maintaining investor confidence and supporting economic resilience in the region [2d150723].
The sustainable bond market in Vietnam reached a size of US$800 million at the end of March 2024, according to a report by the Asian Development Bank (ADB). The market consists of green bonds and sustainable bond instruments issued by corporates, with short-term tenors. Vietnam's local currency bond market rebounded with a 7.7% quarterly uptick, driven by increased issuances from the Government and the State Bank of Vietnam. Treasury and other Government bonds grew 3.3% to support the Government's funding requirements, while corporate bonds contracted 0.9% due to maturities and low issuance volume. Government bond yields rose by an average of 56 basis points due to rising domestic inflation and the US Federal Reserve's delay in cutting its policy rate. Vietnam's year-on-year consumer price inflation in May was 4.44%, nearing the Government's ceiling of 4.50%. Bond outflows from regional markets reached $20 billion in March–April, with slower disinflation supporting higher interest rates. Emerging East Asia's local currency bond market expanded by 1.4% in Q1 2024 to reach $24.7 trillion, with contractions in government bond issuances in China and Hong Kong tempering regional market growth. Sustainable bond issuance in ASEAN, China, Japan, and South Korea contracted in Q1 2024, reaching $805.9 billion by the end of March. The sustainable bond market in ASEAN+3 is the world's second-largest, with an 18.9% global share, but sustainable bonds only make up 2.1% of the total bond market in ASEAN+3 compared to 7.3% in the European Union [3fd5f6c7].