Latest news with #BondConnect
RTHK
3 days ago
- Business
- RTHK
Bond Connect tweaks enrich investment spectrum: expert
Bond Connect tweaks enrich investment spectrum: expert Currently, the Southbound Bond Connect has a daily investment quota of 20 billion yuan, and an annual limit of 500 billion yuan. File photo: RTHK A fixed-asset investment veteran said that the latest tweaks on the Bond Connect scheme enrich the investment spectrum for onshore investors, but called for the link's annual quota to be further increased to facilitate growing transaction volume. The comments came after a senior official from the People's Bank of China (PBoC) announced last week that the southbound leg of the bond trading link will be opened to non-banking players such as securities and wealth management firms to invest in offshore bonds. The move marked a significant step by Beijing to relax capital-flow restrictions, as previously only banks and qualified institutional investors were eligible. It also offered an opportunity for onshore investors looking for higher yields, according to Shen Li, Head of Foreign Exchange Sales, Asia Pacific at State Street Markets. "It all comes down to the fact that you can further diversify out of the onshore investment opportunities, as at the moment the bond yield onshore is still on the low end as officials want to keep the loose monetary policy to stipulate the local economy," he told RTHK. "Investors…generally invest in the China Government Bonds (CGBs) and Policy Bank debts, and the Non-convertible Debentures (NCDs). I think by opening up the southbound channel, it just opens up the spectrum for investors to choose from." While the policy bank bonds, similar to the CGBs, are issued by state-backed financial institutions to promote specific public policy objectives, NCDs are corporate bonds with fixed interest and tenures. Li added that the Bond Connect expansion, along with other planned relaxations including that on the Southbound repurchase agreement (repo), a short-term borrowing and lending transaction involving the sale of securities with a promise to repurchase them at a later date, as well as that on the Swap Connect programme, would also enrich the two-way gates for onshore and offshore investors to choose from. However, Li felt the southbound link's limits of 20 billion yuan each day, or 500 billion yuan annually should be adjusted accordingly, after they were unchanged since the scheme's inception in 2021. "The quota [of the scheme] matters because the [current] 500 billion yuan a year does provide a big cap on the investment opportunity," he explained. "At this moment, I don't think there's any official number being rolled out yet. However, such [an] expansion without an increase on the quota probably doesn't make sense."
RTHK
6 days ago
- Business
- RTHK
'Onshore bonds held by global investors could triple'
'Onshore bonds held by global investors could triple' The Monetary Authority recently announced enhancements to the offshore RMB bond repurchase business to facilitate participation of northbound Bond Connect investors. File photo: RTHK Philippe Dirckx speaking to Chloe Feng An independent regional trade group anticipated holdings of onshore bonds by overseas investors to more than triple to 10 percent in the coming years, after Beijing further expanded the Bond Connect scheme to encourage capital flow. Under the expansion, four types of mainland-based financial institutions – brokerages, insurers, mutual funds, and wealth managers – that were previously excluded will be allowed to utilise the southbound leg of the trading link to access global bonds via Hong Kong. Philippe Dirckx, managing director and head of fixed income at the Asia Securities Industry and Financial Markets Association (ASIFMA), said this could broaden the profiles of mainland investors, many of whom were seeking to diversify their assets. "If you're looking at the new institutions that have been granted access, especially the mutual funds and wealth management, insurance companies, these are institutions that are looking for large sets of investment,' he told RTHK. "They're looking at other links [that they do not] have on shore, [and] all the investment opportunities that they need to fulfil their end-clients' desire, catching [up] expectation in terms of yields or the profile of diversification." He expected demand for both yuan-denominated "dim sum" bonds, as well as US-dollar-denominated bonds issued in the SAR to be sought after by these investors. The scheme's continuous tweaks, Dirckx noted, could also pave the way for global investors to boost their onshore bond holdings, which currently stood at three percent. "The three percent is certainly way too low for I think the trend will definitely be for international investors to hold way more of Chinese-assets than they currently do. My view is that it could go up to 10 percent if you compare to the peers," he said. "I think we are a at an interesting point now when we see (the) US dollar weakening against most of the currencies across the globe, and you've seen investors diversifying the investment outside of the US. "So they there are many factors that could drive the attractiveness of Chinese assets and Chinese government bonds for international investors. "And by doing so, it will internationalise the renminbi," Dirckx added, although he cautioned many factors could affect progress, including interest rate differentials and geopolitics.
RTHK
6 days ago
- Business
- RTHK
'Onshore bonds held by global investors could triple'
'Onshore bonds held by global investors could triple' The Monetary Authority recently announced enhancements to the offshore RMB bond repurchase business to facilitate participation of northbound Bond Connect investors. File photo: RTHK Philippe Dirckx speaking to Chloe Feng An independent regional trade group anticipated holdings of onshore bonds by overseas investors to more than triple to 10 percent in the coming years, after Beijing further expanded the Bond Connect scheme to encourage capital flow. Under the expansion, four types of mainland-based financial institutions – brokerages, insurers, mutual funds, and wealth managers – that were previously excluded will be allowed to utilise the southbound leg of the trading link to access global bonds via Hong Kong. Philippe Dirckx, managing director and head of fixed income at the Asia Securities Industry and Financial Markets Association (ASIFMA), said this could broaden the profiles of mainland investors, many of whom were seeking to diversify their assets. "If you're looking at the new institutions that have been granted access, especially the mutual funds and wealth management, insurance companies, these are institutions that are looking for large sets of investment,' he told RTHK. "They're looking at other links [that they do not] have on shore, [and] all the investment opportunities that they need to fulfil their end-clients' desire, catching [up] expectation in terms of yields or the profile of diversification." He expected demand for both yuan-denominated "dim sum" bonds, as well as US-dollar-denominated bonds issued in the SAR to be sought after by these investors. The scheme's continuous tweaks, Dirckx noted, could also pave the way for global investors to boost their onshore bond holdings, which currently stood at three percent. "The three percent is certainly way too low for I think the trend will definitely be for international investors to hold way more of Chinese-assets than they currently do. My view is that it could go up to 10 percent if you compare to the peers," he said. "I think we are a at an interesting point now when we see (the) US dollar weakening against most of the currencies across the globe, and you've seen investors diversifying the investment outside of the US. "So they there are many factors that could drive the attractiveness of Chinese assets and Chinese government bonds for international investors. "And by doing so, it will internationalise the renminbi," Dirckx added, although he cautioned many factors could affect progress, including interest rate differentials and geopolitics.
RTHK
08-07-2025
- Business
- RTHK
Beijing opens up southbound Bond Connect scheme
Beijing opens up southbound Bond Connect scheme Jiang Huifen, a senior official at the People's Bank of China, says the country will support more onshore investors to access offshore bonds. Photo: RTHK Bonnie Chan, chief executive of the Hong Kong Exchanges and Clearing, says China's bond market has huge room to grow. Photo: RTHK China's central bank said on Tuesday more mainland-based institutions would be allowed to invest offshore through the Bond Connect scheme, with authorities planning to open it up to non-banking investors. The scheme enables onshore investors to access Hong Kong's bond market. Currently, financial institutions not in the banking sector are excluded from the southbound leg of the trading link. Speaking at the Bond Connect Anniversary Summit 2025, Jiang Huifen, deputy director-general of the financial market department at the People's Bank of China, said the scheme was expanded to also cover brokerages, insurers, mutual funds and wealth managers. The move will provide wider access for onshore investors to international bonds traded in Hong Kong, including offshore yuan- and US dollar-denominated debt. According to Jiang, the quota under the Swap Connect scheme, which allows global investors to trade and clear onshore yuan interest-rate swaps, will also be increased. She added that China's bond market was growing following the emergence of the global tariff war, with domestic bonds held by overseas investors rising by nearly 200 billion yuan from about 4 trillion yuan at the start of the year. "We are actively studying other measures to promote the opening up of the bond market," she told participants in a video speech. "We will also enhance the facilitation level of cross-border investment and financing, promote the establishment of a one-stop account opening platform for overseas investors." Analysts believe the move by the central bank reflected Beijing's wider efforts to open up its financial system, improve two-way capital flows by loosening restrictions on financial flows, and enhance the global appeal of the yuan. Bonnie Chan, chief executive of Hong Kong Exchanges and Clearing, said China's bond market, already the second largest in the world, had room for growth with international investors accounting for only 3 percent of the total. "We don't expect international investors to maintain such a small exposure indefinitely. There is a huge amount of room for growth," she told event participants. "With global investors increasingly seeking diversification, there is a huge opportunity for that growth to happen in the coming years. "And with unique connect channels such as Bond Connect, this is where global investors will get the best access to China's growth opportunities." Eddie Yue, chief executive of Hong Kong Monetary Authority, also hailed the expansion of the southbound Bond Connect scheme. "This will open up more channels to meet the growing demand from mainland investors, addressing their needs for diversified asset allocation," he said. "It will also bolster the development of Hong Kong's bond market by widening the investor base and enhancing market liquidity,hence increasing Hong Kong's attractiveness to both bond issuers and global investors."
Business Recorder
08-07-2025
- Business
- Business Recorder
Yuan hits two-week low on renewed US tariff worries, prompts state bank buying
SHANGHAI: China's yuan briefly weakened to a two-week low against the dollar on Tuesday on renewed investor worries over US tariffs, but it recouped early losses after major state-owned banks stepped in to support the currency. US President Donald Trump on Monday began telling trade partners - from powerhouse suppliers like Japan and South Korea to minor players - that sharply higher US tariffs will start on August 1. But China has until August 12 to reach a trade agreement after Washington and Beijing agreed to a framework deal in June that restored a fragile truce. China warned the Trump administration on Tuesday against reigniting trade tensions by restoring tariffs on its goods next month, and threatened to retaliate against nations that strike deals with the United States to cut China out of supply chains. 'Trade tensions are coming back to the fore,' Morgan Stanley economists, led by Chetan Ahya, said in a note. 'This development, plus potential implementation for sectoral tariffs on pharma and semis (pharmaceuticals and semiconductors), China negotiations and the trans-shipment issue suggest that uncertainty will likely persist, weighing on corporate confidence, capex (capital expenditure) and the trade cycle.' The onshore yuan slipped to 7.1833 per dollar, the weakest level since June 23, before recovering to trade 0.05% firmer at 7.1715 as of 0339 GMT. Its offshore counterpart was up about 0.11% in Asian trade to 7.1713. Major state banks quickly emerged in the onshore spot market in the morning to sell dollars and trim the initial yuan losses, multiple people familiar with the matter said. Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate at 7.1534 per dollar, 238 pips firmer than a Reuters' estimate of 7.1772. The gap between the official fixing and market projections was the widest since June 18, with some currency traders interpreting it as an official sign that authorities want to keep the currency stable without rapid moves in either direction. The spot yuan is allowed to trade 2% either side of the fixed midpoint each day. Separately, China will support more onshore investors to invest in offshore bonds and expand the scope of the Bond Connect scheme to include non-banking institutions, a senior PBOC official said on Tuesday.
