Notes being counted in a bank

Picture copyright

A protracted-awaited scheme enabling international buyers to purchase and promote Chinese language bonds has been launched.

The Bond Join programme is Beijing’s newest try to open up its monetary markets and appeal to international capital.

China’s $9 trillion bond market is the third-largest on the planet, however solely 2% of Chinese language bonds are foreign-owned.

The launch has been timed to coincide with the 20th anniversary of Hong Kong’s handover to Chinese language rule.

Initially, Chinese language bonds might be purchased by banks, insurers and fund managers through Hong Kong. No date has been set for Chinese language funding in international bonds.

HSBC Holdings and an asset administration unit of Financial institution of China grew to become the primary establishments to commerce utilizing the scheme, with about $300m value of bonds bought in early buying and selling.

Shopping for Chinese language bonds – basically Chinese language authorities and company debt – will give buyers better entry to investments denominated within the Chinese language forex, the yuan or renminbi.

Abroad buyers have previously been cautious about coming into the market – partly over the soundness of the Chinese language forex in addition to Beijing’s perceived lack of urgency to reform its monetary markets.

There has additionally been long-held concern concerning the credibility of credit score rankings for bonds in China.

Related methods to allow dealing in Chinese language shares have been rolled out not too long ago.

Since late final yr, international buyers in Hong Kong have been able to trade shares in about 900 firms in companies on the Shenzhen Stock Exchange and vice-versa following the official launch of the Shenzhen-Hong Kong buying and selling hyperlink.

That hyperlink adopted the launch of the Shanghai-Hong Kong Inventory Join in November 2014, which allowed worldwide buyers to commerce in lots of of Shanghai-listed A-shares in addition to Hong Kong shares.

Final month, US inventory index supplier MSCI agreed to include China’s mainland domestic shares in its emerging markets index for the first time.