Hong Kong needs a liquidity revolution

Abstract

In the past two decades, Hong Kong was the jewel of the Asian capital markets. But today, the Hong Kong stock market faces an unavoidable reality: insufficient liquidity. Trading volume has declined, valuations have been persistently low, and the financing capabilities of quality enterprises are severely constrained. The issue is not that Hong Kong lacks quality companies, but rather that it lacks new liquidity absorption models. In the new global capital landscape, liquidity determines market pricing power and discourse power. Wall Street holds this discourse power, continuously cycling funds and assets through ETFs, derivatives, and structured tools, forming a vast liquidity network. In contrast, the Hong Kong capital market remains stuck in a traditional pattern of placements, IPOs, and secondary market trading, urgently needing a new "liquidity revolution."

I. Hong Kong's Problem Lies Not in Assets, but in Liquidity

The Hong Kong capital market has never lacked quality assets. Over 70% of the companies in the Hang Seng Index derive their revenue primarily from mainland China, covering high-growth sectors such as technology, finance, consumption, and pharmaceuticals. In 2022, there were over 2,500 listed companies in the Hong Kong stock market, with a total market capitalization exceeding HKD 40 trillion, ranking among the top globally in terms of asset quality and scale. However, the market has been silently shrinking:

• In 2023, the average daily trading volume of the Hong Kong main board was only HKD 112 billion, down over 40% from the peak in 2021. In comparison, the Nasdaq's daily trading volume often exceeds USD 200 billion.

• From 2022 to 2023, the total amount raised through IPOs in Hong Kong declined for two consecutive years, with the 2023 financing scale accounting for only 7% of the global IPO market, lagging behind Nasdaq, the New York Stock Exchange, and even the National Stock Exchange of India.

• The price gap between the same company’s A-shares and H-shares has long existed, with H-shares in sectors such as finance and energy often trading at discounts exceeding 30% compared to A-shares.

Where does the problem lie? Liquidity.

The Bank for International Settlements (BIS) report in 2023 pointed out that while Hong Kong's liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) meet regulatory requirements, market depth and trading activity are far below those of major international financial markets. Without liquidity, there is no effective price discovery mechanism; without sustained buying, even the best assets struggle to realize their value.

II. The Old Engine Has Failed, Where Is the New Momentum?

The Hong Kong government has not been inactive. Since 2022, the Hong Kong Monetary Authority and the Securities and Futures Commission have jointly launched several innovative policies:

• January 2023: Issued the first batch of virtual asset trading platform licenses, with HashKey Exchange, OSL, and others becoming licensed institutions.

• June 2024: The "Stablecoin Issuance Regulation" will be officially implemented, standardizing the issuance of fiat-backed stablecoins like USDH and HKDC.

• First quarter of 2025: The Monetary Authority will launch the RWA registration system, initially covering bonds, real estate funds, and tokenized products for bulk commodities.

In fact, Hong Kong has surpassed Singapore and Dubai in terms of regulatory innovation in digital finance, second only to the European Union. However, these systems are merely "canals," not "water sources." According to a 2023 market survey by the Hong Kong Stock Exchange, over 60% of institutional investors believe that Hong Kong lacks an effective mechanism to convert innovative policies into market liquidity. What the Hong Kong financial market needs is a new engine that can truly aggregate funds, assets, and flows.

III. RWA Brokers: New Liquidity Organizers

In traditional finance, brokers, exchanges, and market makers each play their roles. But in the era of RWA (Real World Assets), these roles are far from sufficient.

The essence of RWA is to map real-world assets—stocks, bonds, real estate, bulk commodities—into tradable digital rights through blockchain technology. PwC predicts that the global RWA market will reach USD 16 trillion by 2027, with the Asia-Pacific region accounting for over 35%. This not only requires trading venues but also a new type of organizer that can connect the asset side, capital side, and flow side. This role is precisely that of RWA brokers (XBrokers). Initiated by JU.COM, XBrokers is such a new liquidity organizer:

• On one hand, it connects listed companies, providing them with targeted financing and continuous liquidity solutions.

• On the other hand, it connects investment communities, aggregating dispersed funds and flows into orderly buying.

• Through mechanisms such as pledging, borrowing, and tokenization incentives, it creates long-term and sustainable market momentum.

Why?

• Listed companies need channels to bring targeted financing, stock rights, and other asset packages to the market.

• Investors and communities need entry points to aggregate funds, flows, and trust into real buying.

• The market needs mechanisms to link the primary market with the secondary market, capital with flows, and assets with derivatives.

RWA itself is not a panacea; asset tokenization is just the first step. To truly release liquidity, a key role is essential: RWA brokers (XBrokers) because the essence of RWA is to map real-world assets onto the chain. It requires not just a trading matching venue but a new role that integrates the asset side (listed companies), capital side (retail/institutional), and flow side (communities). XBrokers, initiated by JU.COM, is born for this purpose.

IV. A Financial Revolution for Hong Kong

For a long time, RWA has been regarded as the most imaginative track in blockchain, yet it has been trapped in the dilemma of "having assets but lacking liquidity, having technology but lacking markets." The emergence of XBrokers will completely change this situation. This is not just about adding new institutions; it is a reconstruction of mechanisms and an awakening of liquidity. Because the traditional financial structure can no longer activate the valuation of Hong Kong stocks, the combination of RWA (real-world assets) and the new XBrokers is the breakthrough point. When the roles of RWA and XBrokers combine, a new possibility emerges: leveraging smaller amounts of capital to drive larger liquidity.

• Primary market: Discounted subscriptions and lock-up mechanisms create initial buying and generate scarcity.

• Secondary market: Through code mapping and convenient trading, primary market buying is transformed into sustained trading momentum.

• Liquidity leverage: Listed companies can drive multiple market buying with smaller reserves of cash or stock.

• Market circulation: Funds, flows, and assets circulate in a closed loop, forming positive expectations and price discovery.

This is not just a new financial tool, but a liquidity revolution, which means:

• Investors gain a fairer and more efficient participation channel.

• Listed companies can leverage their market value and financing space at a low cost.

• The entire market's liquidity structure is redefined.

This is not empty futurism, but a reality that is happening. The Hong Kong government's institutional design, market pilot explorations, and JU.COM's innovative model are gradually converging into a clear path. RWA brokers are the key piece in building a new financial ecosystem in Hong Kong.

Conclusion: Hong Kong's New Flag

Hong Kong needs a new narrative. In the past, it was known as the "Asian International Financial Center"; in the future, it will have a new label: a global liquidity center driven by RWA. Hong Kong needs a liquidity revolution. The core of this revolution is not to imitate Wall Street again, but to create a financial mechanism that belongs to Hong Kong itself through the integration of the XBrokers model proposed by JU.COM.

When RWA and XBrokers drive together, it can bring not only technological innovation but also institutional and market structure innovation. Hong Kong will no longer be a vassal of Wall Street but a creator of a new global liquidity order.

• Let Hong Kong become a bridge connecting global capital again.

• Enable more enterprises to gain financing vitality.

• Restore the market's liquidity discourse power to compete with Wall Street.

The emergence of RWA brokers is the catalyst for all this. RWA is the future, XBrokers is the engine, and Hong Kong will be the starting point.

Data sources: Hong Kong Monetary Authority, Hong Kong Stock Exchange, IMF, BIS, BDO, PwC, Morgan Stanley research reports.

Note: This article is based on publicly available policy documents, market data, and innovative practices, aiming to promote industry discussion and consensus building. Reprints, citations, and responses are welcome.