The Institute carries out research projects on topics that are highly relevant to the financial services industry and regulators in Hong Kong. They also explore very new developments in financial markets with the aim of providing the financial services industry in Hong Kong with ideas and insights regarding its strategic development in the long run. 

The reports of completed projects can be found here.

The following projects will be completed in 2020.
Developing Hong Kong into a global green bond hub
Global warming and climate change are causing more frequent and extreme weather events leading to new challenges and risks to economies worldwide. Reflecting greater social awareness and support for financing green projects, recent years have seen significant growth in the global green bond markets, facilitated by government initiatives and a notable trend towards the inclusion of environment, social and governance considerations in the investment mandates of fund managers. This project assesses the international experiences of and policy initiatives for green bond markets and seeks to understand issues from the perspectives of local green bond market participants. Globally, growth in the green bond market is expected to gather momentum, with issuance expected to surge in the coming years. This project explores how Hong Kong, as an International Finance Centre, can tap into the growth potential of the global green bond market and identify opportunities to support and accelerate Hong Kong’s development as a global green bond hub.

The impact of algorithmic and high-frequency trading (AHFT) on market liquidity and volatility in Hong Kong
AHFT is one of the main market innovations that have occurred, across different countries and various asset classes, in the past two decades. While AHFT has been studied in detail for major international markets, especially in the aftermath of brief but volatile events (labelled as ‘flash crashes’), the adoption and the potential effects of AHFT in the context of Hong Kong financial markets has not fully explored. Some believe that AHFT may play a significant role in driving market instabilities and, ultimately, affects market functioning. This project aims at addressing these concerns and it investigates the extent of AHFT in Hong Kong financial markets, especially with reference to its potential impact on market liquidity and volatility. Given the importance of AHFT and the attention placed on it by policy makers and regulators, the implications of the results of the analysis for the existing regulatory framework are also considered.

The following projects will be completed in 2021.

Covid-19 and the Financial Services Industry in Hong Kong: Lessons to be Learnt and their Implications for Market Participants and Regulators
The adverse impact of Covid-19 on the economy in Hong Kong and around the world has been unprecedented. To overcome challenges arising from the pandemic, the financial services industry has implemented new policies and adjusted business procedures to ensure smooth functioning of thetheir operations. This study aims to assess the impact of the pandemic on the financial services industry in Hong Kong, review the solutions adopted by financial institutions across various sector, and discuss the roles of financial infrastructure and financial innovation in enhancing the resilience of the financial systems to this rare but widespread shock.

Artificial Intelligence and Big Data in the Financial Services Industry: A Regional Perspective and Strategies for Talent Development
Advances in data analytics and machine learning techniques led to a broader adoption of artificial intelligence (AI) and big data (BD) technologies across different sectors in the financial services industry. This project aims to explore the recent trends and developments of AI and BD adoption by banks, insurers and asset managers across financial centres in the region. This study highlights opportunities, challenges and prospects for financial institutions in embracing these new technologies, and explores the strategies and policy options in nurturing and expanding the talent pool in AI and BD to meet the growing demand in the financial industry. It also explores the implications for talent development and capacity building in these areas.

Demographic Changes in Hong Kong and their Implications for Long-term Asset Markets
The pace of population aging in Hong Kong will be ramping up in the coming decades, with nearly one in every three persons reaching the age of 65 or above by 2038. Aging population will impact the demand for long-term assets while the corresponding supply may not be sufficient to satisfy the increasing needs of the silver economy. The purpose of this study is to explore the demographic trends in Hong Kong and their implications for the long-term asset markets. It discusses public and private sector initiatives on expanding the supply of long-term assets including long-term securities and ESG assets, and the investment needs of insurers, asset managers and private investors given the trend of aging population. The study will also highlight the strategic importance in expanding the depth and breadth of domestic long-term asset markets that help reinforce the role of Hong Kong as an asset management hub in the region.