China-HK bond links pegged for further expansion

China will look to add more trading platforms to its Bond Connect information platform launched in support of the Greater Bay Area initiative, covering Macau, Hong Kong and nine mainland cities.
The Bond Connect program, which was opened in July 2017, allows investors from the mainland and abroad to trade in each other’s bond markets, using Hong Kong as a conduit.
Hong Kong, where the Bond Connect program has its market infrastructure linkage, will continue to play a key role as the gateway in and out of China, especially in the financial realm, monetary authorities said.
China plans to reduce the trading fees, extend trading hours and further improve the services in the primary bond market, said Pan Gongsheng, vice-governor of People’s Bank of China (PBOC), the central bank.
“The Bond Connect has become an embodiment of embracing international market standards and practices, while fully complying with the rules and regulations of the Chinese market. It has also become an important bridge for the opening-up of China’s financial market,” said Pan.
“To the mainland, Hong Kong is a major financial center that can be trusted to pioneer its capital market liberalization program. To the global investors, Hong Kong offers a familiar legal and regulatory environment in which they can operate and access the mainland bond market,” the PBOC noted in a statement.
China’s bond market has a total value of 108 trillion yuan (122 trillion patacas) now and is the second largest in the world.
By the end of June, about 900 foreign institutions from more than 60 countries and regions had accessed the interbank bond market, investing in 2.6 trillion yuan of bonds denominated in Chinese yuan. Foreign investors hold 2.4% of all the bonds in China, and their share of treasury bonds is 9 percent, the official data showed. MDT/China Daily