Hong Kong will launch an index for offshore yuan bonds, according to Chief Executive John Lee, betting that a market benchmark can boost trading activity and reinforce the city's role as China's premier offshore renminbi hub. The Hong Kong Exchanges and Clearing Limited's Offshore RMB Bond Index will be a 'reference for market trends and an underlying index for exchange-traded funds.' The benchmark will track so-called dim sum bonds and will be the Asian financial center's first dedicated gauge for the market that will provide investors with a key reference point for performance and asset allocation.

Chinese authorities are amplifying efforts to bolster Hong Kong's status as the top offshore yuan market in the world, tapping on growing investor enthusiasm for China's currency as geopolitical tensions including the Iran war cast doubts on the dollar's status. In July, regulators expanded a program called Southbound Bond Connect, which allows mainland institutional investors to buy offshore bonds through Hong Kong, raising the annual limit to 800 billion yuan ($119 billion) from 500 billion yuan.

Momentum in the dim sum bond market has accelerated this year. Sovereign and corporate issuers sold a combined 876 billion yuan of offshore yuan-denominated bonds so far this year, up 34% from the same period a year earlier and a record for the period, according to data compiled by Bloomberg.