CGS International, October 8, 2025
Excerpt from CGS International report.
Report Summary
- Hong Kong’s stablecoin regulatory regime is advancing, with the HK Monetary Authority (HKMA) expected to prioritize cross-border payment use cases and grant only a handful of stablecoin issuer licenses initially, favoring large banks with strong exporter relationships.
- Near-term earnings impact from stablecoin adoption for traditional banks is expected to be minimal, but rapid growth could disrupt deposit flows, monetary policy transmission, and fee income in the long run; banks could also benefit as stablecoin issuers or custodians.
- Key challenges for stablecoin adoption include cross-border regulatory harmonization, user security perceptions, on/off ramping costs, and business comfort with current payment methods.
- Sector rating is Overweight due to improving operating trends and dividend yield spreads; top stock picks are China Merchants Bank (CMB), China Construction Bank (CCB), ICBC, and CQRCB.
- China is considering yuan-backed stablecoins to promote global currency usage, with Hong Kong and Shanghai as pilot cities, and is expected to discuss this at major international summits.
- China banks have medium ESG risk but are increasing green finance initiatives in line with national climate goals, potentially improving their ESG scores and valuations.
Above is an excerpt from a report by CGS International. Clients of CGS International can be the first to access the full report from the CGS International website: https://www.cgs-cimb.com
