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Hong Kong Monetary Authority (HKMA)

Hong Kong on track with China’s bond connect plan, HKMA says

PUBLISHED : Tuesday, 20 December, 2016, 7:59pm
UPDATED : Friday, 26 January, 2018, 4:14pm

Hong Kong is in preliminary talks with mainland authorities in a potential bond market connect scheme to deepen the link between the two sides after the launch of the Shenzhen-Hong Kong stock connect plan, the city’s de facto central bank chief said on Tuesday.

“We had some general discussions with mainland authorities about the bond connect scheme,” said Norman Chan Tak-lam, chief executive of the Hong Kong Monetary Authority, during a visit to the Chinese capital.

Chan arrived in Beijing on Sunday, leading a Hong Kong Association of Banks delegation in their annual visit to meet the People’s Bank of China, the mainland’s banking and foreign exchange regulators.

Chan said the talks with the mainland’s authorities were preliminary as no time frame and exact details have been decided, but he said Hong Kong can play a role in connecting foreign investors with the mainland’s bond market.

“The bond market is very big in China, and there is increasing interest from foreign investors,” Chan said. “We are in talks with the mainland to make it easier for foreign investors to get access to the market.”

The stock markets between Hong Kong and China have been closely connected after the launch of the Shenzhen-Hong Kong stock connect scheme earlier this month, as well as the Shanghai-Hong Kong connect earlier, he said.

Separately, in a Tuesday meeting with vice premier Ma Kai, Chan said the top official reassured Hong Kong’s status as an international financial centre and offshore renminbi business hub.

Chan cited Ma as saying that the mainland remains committed to internationalising its currency gradually, but there will be challenges during the process. Ma also said that the mainland will not depreciate its currency to spur exports, according to Chan.

During the visit, the HKMA also signed a memorandum of understanding with The Export-Import Bank of China and China Development Bank, the mainland’s two policy banks, to establish strategic co-operation via the Infrastructure Financing Facilitation Office, established in July to develop the city as a fundraising centre for infrastructure projects under Beijing’s “One Belt, One Road” initiative.

Regarding Hong Kong’s application to be a member of the mainland-led Asian Infrastructure Investment Bank (AIIB), Chan said the bank is going through an internal process and will make an announcement when it’s completed.

“Hong Kong has a lot to offer in terms of our treasury market function and bond financing function,” he said, without giving a time frame, after meeting with the bank’s president Jin Liqun in Beijing.