Eligible overseas investors will gain access for the first time to mainland China’s massive interbank bond market through a planned hookup with Hong Kong, known as Bond Connect.
The People’s Bank of China and the Hong Kong Monetary Authority said in a joint announcement that they approved allowing financial-infrastructure institutions to collaborate in establishing mutual bond market access. Northbound trading will commence in the initial phase, enabling Hong Kong and overseas investors to participate in the mainland interbank market. “Southbound trading will be explored in due course,” the announcement said.
Hong Kong financial secretary Paul Chan said: “I am pleased that Hong Kong, as China’s international financial center, continues to play a unique and significant role in the opening up of the mainland’s financial markets to the rest of the world.” China has the world’s third-largest bond market after the United States and Japan.
According to the joint announcement, “Bond Connect will be formally launched after the relevant rules and system development have been finalized, market participants’ practical needs suitably addressed, relevant regulatory approvals granted and all other necessary preparations completed.” No time frame was mentioned.