Northbound trading trial on Bond Connect starts today
HONG KONG The central banks of China and Hong Kong said non-mainland investors can start trading Chinese corporate bonds in a trial beginning today, confirming a calendar entry that appeared on the Bond Connect programme website late on June 30.
Trading will initially be "Northbound", so mainland investors will be not yet be able to buy and sell Hong Kong-listed debt.
The announcement coincides with the 20th anniversary of the resumption of Chinese rule in Hong Kong, and marks China's latest measure to open up its capital markets.
The Bond Connect follows similar stock-trading programmes between the Shanghai and Shenzhen stock exchanges and their Hong Kong counterpart.
Standard Chartered Bank's John Tan, head of financial markets for Greater China and north Asia, said China's US$9 trillion (S$12 trillion) bond market is the world's third largest, yet is relatively undersold to foreign investors.
The Bond Connect means more global debt indices will include Chinese bonds in the foreseeable future, he said.
Mr Zhang Dong, vice-president of Ping An Securities, said the Bond Connect will promote the liberalisation of China's debt market to outside investors and is a key part of China's securities market liberalisation policy.
In a joint statement yesterday, the People's Bank of China and Hong Kong Monetary Authority said they have agreed the principles of cross-boundary supervisory cooperation.