Interest in Bond Connect with China grows

Added 21st October 2015

Exchanges in Hong Kong and Russia are each firming up their own plans for separate Bond Connect initiatives with China.

Interest in Bond Connect with China grows

Discussions on launching a Hong Kong-China Bond Connect are taking priority over the planned linkage between Hong Kong and Shenzhen equity markets, according to the South China Morning Post.

“Hong Kong Exchanges and Clearing has been inundated with questions regarding the bond programme’s progress,” the report said. Although officials have not provided recent updates on the initiative, the report quoted an official from the Asia Securities Industry & Financial Association who said it could be launched as soon as six months from now.

In addition, Russia and China intend to launch a scheme in 2016 that allows each side direct investment in government bonds, according to a Shanghai Daily report.

Russian officials said they are considering the issuance of yuan-denominated government bonds “as soon as next year, which could be the first sale of Chinese mainland yuan bonds by a foreign government”.

The Hong Kong Stock Exchange has a strong interest in expanding the market linkage it has with Shanghai into other asset classes, said Tae Yoo, head of client business development in the global markets division for the HKEx.

Russia is also considering an equity market linkage with China.

The Hong Kong-Shenzhen Stock Connect, which had been expected to launch this year, will likely be delayed until 2016 as officials wait for mainland markets to stabilise, according to a Bloomberg survey of analysts.

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