Two-way bond trading between Hong Kong and mainland China has been enabled with the latest launch of a southbound cross-border link.
The southbound leg of the Bond Connect scheme will effectively launch on September 24, according to an announcement by the Hong Kong Monetary Authority (HKMA).
«The launch of southbound trading of Bond Connect marks another milestone of mutual access between Hong Kong and mainland,» said HKMA chief executive Eddie Yue Wai-man during a media briefing.
«The southbound trading will deepen the two-way opening up of the mainland financial markets and promote the vibrant development of the Hong Kong bond market and hence strengthen Hong Kong’s status as an international financial center.»
Outflow Caps
The upcoming southbound leg will cap outflows from mainland China to Hong Kong’s bond market at 20 billion yuan ($3.1 billion) per day and 500 billion yuan per year.
This differs from the northbound leg which has no quota.
Bond Connect History
The latest development will mark the completion of two-way bond trading after the Bond Connect scheme was first established in July 2017 with its northbound leg.
Since then, more than 2,700 global institutional investors have been approved to use the northbound link which registered a daily average turnover of 26.5 billion yuan in the first eight months of 2021, according to data from the Hong Kong Exchanges and Clearing.
The expanded Bond Connect scheme follows just days after authorities announced the launch of the Wealth Management Connect scheme, another cross-border link that enables cross-selling of investment products between qualified investors within the 11-city cluster Greater Bay Area.
