HONG KONG – Hong Kong Monetary Authority (HKMA) is considering deepening some of the investment connection schemes between the city and mainland China, Chief Executive Eddie Yue said on Tuesday.
Yue told the HSBC Global Investment Summit in Hong Kong there was capacity for greater “southbound” activity from Chinese investors into Hong Kong’s financial markets.
“What we’re trying to do is really to deepen some of these connect schemes … It’s just the beginning of a long journey, especially the southbound flows, the capital or the investments coming out from China into the world,” Yue told the conference.
He did not give further details.
Northbound trading in the connect schemes allows offshore investors to buy China-listed products including stocks, bonds, exchange-traded funds (ETFs) and wealth management products, while southbound is designed for Chinese-based investors to buy into Hong Kong products.
“Think about the Bond Connect. Currently it’s very limited,” said Yue, adding that only Chinese banks can use the southbound Bond Connect.
“But what if the eligible investor classes are extended to for example, asset managers in China or importantly insurance companies or pension funds in China in future, there could be a very big potential in money for global bonds through the Hong Kong platform.”
Mainland China and Hong Kong in 2017 launched a long-awaited “Bond Connect” programme that links China’s bond market, the world’s second-largest, with overseas investors in a bid to liberalise and strengthen the capital markets.
The scheme initially started with northbound, allowing foreign investors to buy and sell Chinese bonds, and in 2021, the southbound leg of the programme was launched to expand Chinese investors’ access to global bond markets.
