Bond­ing with China

Northwest Arkansas Democrat-Gazette - - ONLINE EXTRA -

China is crack­ing open an­other door to out­side in­vestors for its fi­nan­cial mar­kets.

Hong Kong and main­land Chi­nese of­fi­cials last month ap­proved a long-awaited cross-border bond trad­ing pro­gram, adding to two stock trad­ing links launched in re­cent years.

There’s heavy spec­u­la­tion the pro­gram, known as Bond Con­nect, could launch in early July — timed aus­pi­ciously to co­in­cide with Hong Kong’s 20th an­niver­sary of Chi­nese rule.

The bond link will ini­tially op­er­ate only one way, giv­ing for­eign in­vestors wider “north­bound” ac­cess via Hong Kong-based fi­nan­cial in­sti­tu­tions to China’s bond mar­ket, the world’s third largest.

Main­land Chi­nese must wait for “south­bound trad­ing” in the for­mer Bri­tish colony for now, of­fi­cials say.

An­a­lysts say Bond Con­nect does away with quo­tas and oner­ous re­quire­ments for for­eign in­vestors in bonds and al­le­vi­ates wor­ries about tak­ing their prof­its out of China. Down­sides in­clude the weak­en­ing Chi­nese cur­rency and con­cerns about the re­li­a­bil­ity of China’s do­mes­tic credit rat­ing agen­cies.

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