REG­U­LA­TORS AP­PROVE BOND CON­NECT SCHEME

‘North-bound’ in­vest­ment will not be sub­ject to quo­tas un­der plan

New Straits Times - - Business - BEN­JAMIN HUNG

HONG KONG

IN an­other step to open up China’s cap­i­tal mar­kets, Hong Kong and Chi­nese reg­u­la­tors for­mally ap­proved a long-awaited scheme to con­nect China’s US$9 tril­lion (RM38.88 tril­lion) bond mar­ket with over­seas in­vestors.

The Bond Con­nect pro­gramme has been in the works since Beijing launched a sim­i­lar scheme con­nect­ing Hong Kong and Shang­hai stock mar­kets in 2014.

Over­seas in­vestors have other av­enues to buy Chi­nese debt and cur­rently hold just two per cent of on­shore bonds, a rel­a­tively low level that re­flects con­cerns about cap­i­tal con­trols and the sta­bil­ity of the yuan that some say the con­nect scheme will do lit­tle to al­le­vi­ate. of qual­ity su­per­vi­sion, in­spec­tion and quar­an­tine. The watch­dog said the de­fects could cause head­light fail­ure.

The Hong Kong Mone­tary Au­thor­ity and the Peo­ple’s Bank of China an­nounced their ap­proval on Tues­day, but pro­vided few de­tails about the plan, such as when the bond trad­ing sys­tem would go into op­er­a­tion.

They said China Foreign Ex­change Trade Sys­tem and Na­tional In­ter­bank Fund­ing Cen­tre, China Cen­tral De­pos­i­tory & Clear­ing and Shang­hai Clear­ing House would be the main Chi­nese in­fra­struc­ture providers for the scheme.

They will work with the Hong Kong Ex­changes and Clear­ing and Cen­tral Money­mar­kets Unit to es­tab­lish mu­tual bond mar­ket ac­cess be­tween Hong Kong and main­land China.

“It will pro­vide a new chan­nel for Hong Kong and in­ter­na­tional

In March, VW re­called more than one mil­lion Audi ve­hi­cles due to po­ten­tial leaks and coolant pumps faults. in­vestors to in­vest in main­land China’s bond mar­ket, which is the third-largest in the world and much un­der­sold to global in­vestors at the mo­ment,” said Ben­jamin Hung, chief ex­ec­u­tive for Greater China & North Asia at Stan­dard Char­tered.

Ini­tially, foreign and in­vestors here will be al­lowed to trade in China’s in­ter­bank bond mar­ket, the so-called north­bound trad­ing link. In­vest­ment would not be sub­ject to quo­tas and the scheme would be rolled out in phases, said the au­thor­i­ties.

They did not in­di­cate when north­bound trad­ing would be­gin or when Chi­nese in­vestors would be able to trade in over­seas bonds — the south­bound route. Reuters

It will pro­vide a new chan­nel for Hong Kong and in­ter­na­tional in­vestors to in­vest in main­land China’s bond mar­ket, which is the third-largest in the world and much un­der­sold to global in­vestors at the mo­ment.

The Ger­man car­maker de­liv­ered nearly four mil­lion ve­hi­cles in China last year, two-fifth of its global sales. Reuters

REUTERS PIC

FAW-Volk­swa­gen Au­to­mo­bile Co Ltd’s re­call cov­ered 416,364 Golfs pro­duced be­tween Septem­ber 2009 and May 2014, and 161,226 Sag­i­tars pro­duced be­tween July 2010 and March 2012.

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