Southbound Trading under Bond Connect to be launched Sept 24

The People's Bank of China and the Hong Kong Monetary Authority issued a joint announcement on Wednesday (Sept. 15) that Southbound Trading under Bond Connect will be launched on Sept. 24. This initiative will further expand mutual access between the two capital markets.

The launch of Southbound Trading under the Bond Connect comes shortly after the official launch of Cross-boundary Wealth Management Connect last Friday (Sept. 10).

Chief Executive Carrie Lam, said, "The National 14th Five-Year Plan expresses staunch support for Hong Kong to strengthen its functions as a global offshore Renminbi business hub, an international asset management center and a risk management center. Launching Southbound Trading under Bond Connect to complete the two-way connection of the bond markets will promote further mutual access between the two financial markets, set a new milestone for meeting the objectives laid down in the 14th Five-Year Plan, and reinforce Hong Kong's status as an international financial center."

HK's Financial Secretary, Paul Chan, said, "Hong Kong has been striving to deepen the mutual market access with the Mainland to further strengthen our role in connecting the financial markets in the Mainland and the rest of the world. The launch of Southbound Trading under Bond Connect will expand the product suite of the Connect family. It provides an effective channel for qualified onshore investors to make diversified asset allocation, and at the same time presents enormous opportunities for Hong Kong's financial industry. The launch of Southbound Trading will further underline the unique function of Hong Kong in connecting Mainland capital and the wide range of products in the international market."

Chan also pointed out that Southbound Trading under the Bond Connect would not only enhance the attractiveness of Hong Kong as a bond issuing platform and the liquidity of the bond market in Hong Kong but also further facilitate the progress of Renminbi internationalization. 

In an interview after the launch event of the Southbound Trading on Wednesday, Eddie Yue, Chief Executive of the HKMA , said that the Southbound Trading provides a risk-controlled, convenient and effective channel for the orderly outflow of funds to meet the needs of Mainland financial institutions, while the entry of Mainland financial institutions into HK will also provide great opportunities for the HK bond market.

Northbound Trading under Bond Connect was launched in July 2017. Southbound Trading will allow Mainland investors to invest in Hong Kong's bond market through connection between the financial infrastructure services institutions of the two places.