Macau and Hong Kong forge bond linkage to boost cross-border investment

Monetary authorities in Macau and Hong Kong have announced a bond linkage that will allow investors from both regions to trade bonds seamlessly.This significant development was revealed in a joint statement from the Monetary Authority of Macau (AMCM) and the Hong Kong Monetary Authority (HKMA) yesterday.

The new bond linkage directly connects the Central Moneymarkets Unit (CMU) of Hong Kong with the central securities depository (CSD) managed by the Macao Central Securities Depository and Clearing (MCSD), a subsidiary of the AMCM. This initiative allows investors in both markets to clear, settle, and hold bonds in each other’s jurisdictions, marking a notable advancement in financial cooperation between the two territories.

The timing of this announcement is particularly relevant as Macau actively seeks to diversify its economy. Authorities in Macau view bond trading as a vital component of their new financial ecosystem.

Benjamin Chan, chairman of the AMCM, noted that this bond linkage could serve as an additional financing channel to support major national strategic initiatives, including those related to the Greater Bay Area (GBA).

He further highlighted Macau’s historical ties with Portuguese-speaking countries, suggesting that this new infrastructure will enhance its role as a gateway between China and these nations.

“It will also strengthen Macau’s function as the financial services platform serving China and Portuguese-speaking countries, achieving mutual market access among the financial markets and infrastructures in the GBA,” he said.

Eddie Yue, chief executive of the HKMA, emphasized the importance of this linkage as a “significant milestone” that could enhance collaboration within the GBA. He stated that in recent years, the HKMA has been working to establish connections with various neighboring financial markets to bolster regional cooperation and create more opportunities for diverse financial services, particularly in renminbi business.

“This also provides domestic and overseas investors with a greater variety of investment products, further strengthening Hong Kong’s competitiveness as an international financial center,” Yue added.

Specific details regarding the operational aspects of the bond linkage are still pending. The and AMCM and HKMA have indicated that further information will be released in due course, including an official launch date that will outline detailed arrangements for participants in both markets. Lynzy Valles