The Hong Kong Exchanges and Clearing Ltd (HKEx) flag flutters outside the Exchange Square in Hong Kong on Jan 20, 2017. (EDMOND TANG / CHINA DAILY)
HONG KONG – The Hong Kong Special Administrative Region (HKSAR)’s government has welcomed the launch of southbound trading under the Bond Connect, hailing it as a new milestone for meeting the objectives laid down in the nation’s 14th Five-Year Plan.
In a joint statement, the People's Bank of China and the Hong Kong Monetary Authority announced on Wednesday that the southbound leg of the Bond Connect would be launched on Sept 24.
The announcement came just days after the official launch of the cross-boundary Wealth Management Connect on Friday.
“Launching Southbound Trading under Bond Connect to complete the two-way connection of the bond markets will promote further mutual access between the two financial markets, set a new milestone for meeting the objectives laid down in the 14th Five-Year Plan, and reinforce Hong Kong's status as an international financial center,” said Hong Kong’s Chief Executive Carrie Lam Cheng Yuet-ngor in a statement.
We will continue to fully leverage Hong Kong's unique advantages and capitalize on development opportunities brought by the National 14th Five-Year Plan, the new development pattern of 'dual circulation' and the Guangdong-Hong Kong-Macao Greater Bay Area
Carrie Lam, HKSAR chief executive
She said the positive impacts of the program have been fully illustrated in the Bond Connect’s northbound trading, with foreign holding of mainland onshore bonds having increased from about 880 billion yuan in 2017 to 3,800 billion yuan as of last month. The average daily turnover has increased by 17 times over the same period.
“We will continue to fully leverage Hong Kong's unique advantages and capitalize on development opportunities brought by the National 14th Five-Year Plan, the new development pattern of 'dual circulation' and the Guangdong-Hong Kong-Macao Greater Bay Area,” Lam said.
“Our goals are to actively integrate into the national development and contribute to the internationalization of the mainland's capital market."
Hong Kong’s Financial Secretary Paul Chan Mo Po said the launch of southbound trading would expand the product suite of the “Connect family.”
“It provides an effective channel for qualified onshore investors to make diversified asset allocation and at the same time presents enormous opportunities for Hong Kong's financial industry,” Chan was quoted as saying in the same statement.
The launch would not only enhance the attractiveness of Hong Kong as a bond issuing platform and the liquidity of the bond market in the city, but also further facilitate the progress of renminbi internationalization, Chan added.
The Bond Connect’s northbound trading was launched in July 2017, giving international investors access to the China Interbank Bond Market via trading infrastructure in Hong Kong. The southbound leg will allow mainland investors to invest in Hong Kong's bond market.
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