China-HK bond mar­ket con­nect?

New Straits Times - - Business -

BEI­JING: China is con­sid­er­ing set­ting up debt mar­ket links be­tween Hong Kong and the main­land this year, as it bol­sters sup­port for the econ­omy of the for­mer Bri­tish colony, said Premier Li Ke­qiang yes­ter­day.

Main­land and Hong Kong equity mar­kets have been linked through a “stock con­nect” scheme that al­lows for­eign­ers to ac­cess Chi­nese “A” shares through the Hong Kong ex­change, and main­lan­ders to ac­cess Hong Kong shares through the Shang­hai and Shen­zhen ex­changes.

Ex­changes on the two sides have been work­ing on a sim­i­lar ar­range­ment for bonds, as China looks for ways to fur­ther open its cap­i­tal mar­kets and at­tract for­eign in­vest­ment.

“This year, we are con­sid­er­ing for the first time es­tab­lish­ing a bond mar­ket con­nect be­tween the Hong Kong and the main­land, al­low­ing for­eign cap­i­tal to buy main­land bonds from over­seas and Hong Kong will be the first to ben­e­fit from such an ar­range­ment,” said Li.

“This will help Hong Kong main­tain its sta­tus as an in­ter­na­tional fi­nan­cial cen­tre and pro­vide Hong Kong res­i­dents more in­vest­ment chan­nels,” he told a news con­fer­ence at the close of the an­nual ses­sion of the Na­tional Peo­ple’s Congress, China’s Par­lia­ment.

China has grad­u­ally opened its bond mar­ket to for­eign in­vest­ment and re­dou­bled ef­forts to woo for­eign cap­i­tal, but in­vestors have said mar­ket ac­ces­si­bil­ity and con­cerns about the sta­bil­ity of the yuan cur­rency — and cap­i­tal con­trols en­acted to pro­tect it — could im­pede in­flows.

Stan­dard Char­tered es­ti­mated that the value of out­stand­ing on­shore bonds might rise to 82 tril­lion yuan (RM53 tril­lion) yearend, from 64.3 tril­lion as of end of last year.

By the end of last year, for­eign­ers held a mere 870 bil­lion yuan worth of bonds in the Chi­nese mar­ket, an in­crease of 83.4 bil­lion yuan from the year be­fore, said the State Ad­min­is­tra­tion of For­eign Ex­change. Reuters

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