Beijing launched its Bond Connect programme on Monday, allowing foreign investors to buy and sell Chinese bonds.

The scheme is part of the Chinese government’s push to bring in foreign capital by opening up its financial markets.

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

China’s bond market, worth an estimated $9trn is the third-largest in the world, behind the US and Japan.

However, at present, just two percent of Chinese bonds are foreign-owned.

On the first day of the scheme’s launch, global investors purchased $721.4m of bonds, Reuters reported.

HSBC Holdings and an asset management unit of the Bank of China were the among the first to trade through the scheme, with about $300m worth of bonds purchased in early trading.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

“The launch of the Bond Connect marks a major milestone in the history of global bond markets. Low activity will mean minimal short term repercussions on markets but as volumes pickup, China’s importance for fixed income investments will grow considerably,” Jasper Lawler, a senior market analyst at the London Capital Group told Verdict.

The date of the Bond Connect programme’s launch is also symbolic; coinciding with the 20th anniversary of Hong Kong’s handover to Chinese rule.

Carrie Lam, Hong Kong’s leader, said the programme marked “another new chapter in the development of mutual capital markets access between the mainland and Hong Kong.”

Bonds offer investors a fixed rate of interest and are relatively risk-free given full repayment is expected when the bond expires.

Chinese regulators formally approved the Bond Connect scheme in May.

“Ever since Hong Kong returned to China it has served as an important market for China,” said Pan Gongsheng, deputy governor of the People’s Bank of China.