Mainland-Hong Kong bond connect launched

2017-07-03
Xinhua

Participants attend a ceremony held by Hong Kong Exchanges and Clearing Limited to launch the “northbound” mainland-Hong Kong bond connect in Hong Kong, South China, July 3, 2017. With the northbound trading kicking off after the ceremony, qualified overseas investors will be able to invest in the Chinese mainland interbank bond market via the mainland-Hong Kong bond connect program.[Photo/Xinhua]

Northbound trading allows overseas investors to invest in the mainland interbank bond market through mutual access mechanism between the financial infrastructure institutions in Hong Kong and mainland in the aspects of trading, custody and settlement.

Speaking at the launching ceremony held in Hong Kong on July 3, Hong Kong Special Administrative Region Chief Executive Lam Cheng Yuet-ngor said bond connect marks another new chapter of mutual capital markets access between the Chinese mainland and Hong Kong, which enables eligible overseas investors to access, for the first time, the mainland interbank bond market through infrastructural connection established between the mainland and overseas bond markets.

Participants attend a ceremony held by Hong Kong Exchanges and Clearing Limited to launch the “northbound” mainland-Hong Kong bond connect in Hong Kong, South China, July 3, 2017.[Photo/Xinhua]

“Bond connect is a mutual beneficial collaboration project for both mainland and Hong Kong,” which, Lam said, is conducive to the opening-up of the mainland financial market and the consolidation of Hong Kong’s status as an international financial center.

Serving as a link between the mainland and international markets, Pan Gongsheng, deputy governor of the People’s Bank of China, said bond connect will further enhance the efficiency of mutual financial market access between the mainland and Hong Kong and will broaden the capacity and scale of Hong Kong’s financial market.

Norman T.L. Chan, chief executive of Hong Kong Monetary Authority, said bond connect marks another milestone of mutual access of capital markets between the mainland and Hong Kong, following the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect.

“The continued liberalization of the mainland’s capital account and RMB internationalization will progressively raise demand from overseas investors for RMB asset allocation, while the mainland has been proactively rolling out measures to facilitate overseas investors’ access to its bond market,” said Chan, who believed that bond connect would enhance overseas investors’ participation in the mainland bond market.

The People’s Bank of China and the Hong Kong Monetary Authority jointly announced on May 16 the approval of the bond connect program, allowing investors from the Chinese mainland and Hong Kong to trade bond on each other’s interbank markets.

Southbound trading will be explored in due course, which allows mainland investors to invest in Hong Kong’s bond market through mutual access between the financial infrastructure institutions of both sides.