General Secretary Xi Jinping has stressed the need to increase the global competitiveness of the financial sector, expand the high-standard two-way opening-up of financial markets, improve the capabilities of economic and financial management as well as risk prevention and control in an open environment, and enhance the capacity to participate in international financial governance.
In accordance with the decisions and arrangements of the Communist Party of China Central Committee and the State Council, Southbound Trading under the scheme of Bond Connect between the Mainland and Hong Kong (hereinafter referred to as Southbound Bond Connect) was officially launched on September 24, 2021. The launch ceremony was co-hosted by the People’s Bank of China (PBC) and the Hong Kong Monetary Authority (HKMA) on the morning of September 24. Speakers at the ceremony included PBC Deputy Governor Pan Gongsheng, Deputy Director Deng Zhonghua of the Hong Kong and Macao Affairs Office of the State Council, Chief Executive Carrie Lam of the Hong Kong Special Administrative Region (HKSAR), Hong Kong Financial Secretary Paul Chan Mo-po, Chief Executive Eddie Yue of the HKMA, and Chairman Chen Siqing of the Industrial and Commercial Bank of China. Also present were Deputy Director Yin Zonghua of the Liaison Office of the Central People’s Government in the HKSAR and representatives from relevant departments under the State Council, Hong Kong’s Financial Services and the Treasury Bureau, the Hong Kong Securities and Futures Commission, and other Mainland and Hong Kong institutions of relevance.
By enhancing the cooperation between financial infrastructure services institutions of the Mainland and Hong Kong bond markets, Southbound Bond Connect offers Mainland institutional investors convenient access to the Hong Kong and global bond markets. At the same time, the PBC and the HKMA will strengthen regulatory cooperation in collecting information on transactions and settlements under the scheme and preventing risks.
Southbound Bond Connect is an important step taken by the central government to support the economic development of Hong Kong and promote cooperation between the Mainland and Hong Kong. The measure fully demonstrates not only the commitment of the central government to consolidating and elevating Hong Kong’s status as an international financial center but also its confidence in and resolution to support the long-term prosperity, stability and development of Hong Kong. The launch of Southbound Bond Connect will help cement the position of Hong Kong as a gateway and hub linking the Mainland and international markets, integrate Hong Kong into the big picture of national development, and improve the institutional arrangements for the two-way opening-up of China’s bond market.
On the first trading day of Southbound Bond Connect, over 40 Mainland institutional investors conducted more than 150 transactions with 11 Hong Kong market makers, with the turnovers amounting to approximately RMB4 billion and covering major bond categories on the Hong Kong market.
Going forward, the PBC will continue working with the HKMA, the Mainland and Hong Kong financial infrastructure services institutions, and participating institutions to further improve the institutional arrangements based on the operation of Southbound Bond Connect, and advance the high-quality development of the reform and opening-up of China’s bond market.
