CITIC Construction Investment: Hong Kong Establishes Licensing System for “Fiat Stablecoin” Issuers to Accelerate the Development of Fintech

The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that Hong Kong's stablecoin legislation promotes the accelerated development of fintech. Hong Kong published the “Stablecoin Ordinance” on May 30 to establish a licensing system for fiat stablecoin issuers. This is the world's first special legislation with “value anchoring supervision” as the core principle, reshaping the stablecoin regulatory paradigm and helping the Hong Kong International Financial Center improve competitiveness, the internationalization of the RMB, and the development of the Web3 and digital asset ecosystem. Stablecoin-related industrial chains, such as licensed issuers and custodian service providers in the issuance and escrow structure, and blockchain suppliers in infrastructure and technology, are receiving attention. Meanwhile, the second phase of the tariff game between China and the US continues. Domestic alternatives, rare earths, and tariff-immune varieties are worth paying attention to. The weakening credit of the US dollar also makes gold still have allocation value.

CITIC Construction Investment's views are as follows:

1. Stablecoin legislation, accelerated fintech

1. The Hong Kong Special Administrative Region Government published the “Stablecoin Ordinance” in the Gazette on May 30 to establish a licensing system for issuers of “fiat stablecoins” (stablecoins linked to fiat currencies) in Hong Kong

2. The bill (1) marks the implementation of the world's first special stablecoin legislation with “value anchoring supervision” as the core principle; stablecoin regulations are risk-based, license access, and multi-currency compatibility as the three pillars to reshape the stablecoin regulatory paradigm; (3) reshape the competitiveness of Hong Kong's international financial center; (4) promote the internationalization of the RMB; (5) activate the Web3 and digital asset ecosystem to promote the development of the stablecoin market

3. Stablecoin-related industry chain concerns: 1. Issuance and escrow structure: 1) licensed issuers, 2) escrow service providers; 2. Infrastructure and technology layer: 1) blockchain suppliers, 2) security certification service providers, 3) regulatory service providers; 3. Downstream applications: 1) cross-border payments, 2) RWA, 3) fintech, etc.

II. Tracking the second stage of the Sino-US tariff game

1. The second stage of the tariff game: China and the US contacted each other on May 9, China and the US issued a joint declaration in Geneva on May 12. China and the US will retain 10% tariffs after April 2, suspend 24% tariffs, and cancel subsequent tariffs

2. Phase 2: The focus of the United States shifts to the promotion of trade agreements with many countries and internal policy games, and the market carries out “TACO” transactions. On May 23, negotiations between the US and Europe were blocked. The US threatened to impose a 60% tariff on the EU, then agreed to extend the 50% tariff deadline for the EU until July 9. On May 29, the US International Trade Court blocked the US government's tariff measures from taking effect; on May 30, the US International Trade Court blocked the entry into force of the US government's tariff measures. “Equal tariffs” have been blocked. In the future, it is expected that more sanctions will shift to specific industries and fields of science and technology. Domestic alternatives, rare earths, and tariff-immune varieties are worth paying attention to; at the same time, the credit of the US dollar is weakening, and gold still has allocation value

Fundamental changes in the industry in March and April: export grabbing continues, and domestic demand is stable overall

Among the 33 industrial industries in January and April, demand from the upstream mining industry continued to decline, with oil and gas being the weakest; demand for coal and ferrous metals ore was the weakest; demand for non-ferrous metal ores was strong, and there were signs of falling back; in the midstream industry, overall demand in the materials industry (petrochemicals, chemicals, chemical fiber, rubber plastics, steel) was weak. Among them, smelting demand in the non-ferrous processing industry was still expanding, and building materials improved; the export chain industry's “exports” in April were more obvious, and the demand for metal products, special equipment, automobiles, electrical machinery, and instruments in the equipment category all improved. Demand for sports and entertainment products in the industry Improvement; in the downstream consumer industry, demand for agricultural and sideline food improved, and food demand was stable; in April, retail sales of goods grew 6.6%, and the growth rate of home appliances, consumer electronics, gold and silver jewelry was high

2. In terms of the service industry: (1) Food and beverage consumption grew by 3.8% in April; travel continued to grow during the May 1st and Dragon Boat Festival holidays, and volume and price improvements; (2) the impressive performance of innovative Chinese pharmaceutical companies at ASCO; (3) The average daily turnover of A-shares in May was 1.2 trillion yuan, maintaining a high level of activity; at the same time, the “Action Plan to Promote the High-Quality Development of Public Funds” was introduced, and the non-banking sector is expected to continue to have capital inflows