Bond Connect was successfully launched in Hong Kong on 3 July. Bond Connect is a new initiative for mutual access between the Hong Kong and Mainland bond markets through a cross-border platform that facilitates the efficient trading by overseas institutional investors in the Mainland bond market.
Details can be found in the joint announcement made by the Hong Kong Monetary Authority (HKMA) and the People’s Bank of China.
With Bond Connect, overseas investors will have greater flexibility and convenience when investing in the Mainland bond market. This will also generate greater demand for Hong Kong’s related financial services, such as custody and settlement, asset management, risk management, etc. Furthermore, Bond Connect will enhance trading efficiency by providing a new platform that supports direct trading between overseas investors and Mainland dealers. The first day’s trading saw 89 financial firms conduct 142 transactions worth 7.048 billion RMB yuan.
The Hong Kong and Shanghai Stock Connect began trading in November 2014 while the scheme linking Hong Kong and Shenzhen debuted in December 2016. Both Stock Connects are “two way” in that mainlanders can buy and sell Hong Kong stocks in what is known as southbound trading while international investors can trade A-shares listed in Shanghai and Shenzhen via the northbound connection. The two Stock Connect schemes have been a success, with southbound trading now accounting for 10 per cent of total turnover on the Hong Kong Stock Exchange.