China’s sovereign bond offering in Hong Kong garnered strong demand from investors, following efforts to widen ownership access to global funds. The government also concluded a US$4 billion of foreign-currency bond sale to solid demand. The government auctioned 6 billion yuan (US$938.7 million) worth of notes on Wednesday in the second batch of its annual sale programme to spur the city’s debt market. They attracted 13.3 billion yuan of buying orders, the Hong Kong Monetary Authority said in a statement. It sold 4.5 billion yuan of two-year notes paying 2.4 per cent interest annually and 1.5 billion yuan of 15-year bonds with a 3.6 per cent coupon. The latest sale comes as major global index provider FTSE Russell prepares to add Chinese sovereign bonds to its family of World Government Bond Index next month, a move that could lure as much as US$150 billion of inflows as China becomes a magnet for funds betting on the country’s growing economic influence. “There has been huge demand for China bonds for diversification due to low correlation with other key bond markets and for return enhancement purposes,” said Sally Wong, chief executive of Hong Kong Investment Fund Association. “With the inclusion of China bonds into key international indices, the inflows will only continue to increase.” The sale in Hong Kong also preceded a proposal by the city’s pension regulator overseeing the HK$1.17 trillion (US$150.5 billion) Mandatory Provident Fund to include investment-grade government bonds among eligible investment options for its 4.5 million scheme members going forward. Separately, China completed sales of US$4 billion of notes maturing in three, five, 10 and 15 years on Tuesday despite signs of a slowdown in the economy lately. The global offering attracted US$27 billion of orders, according to lead arranger Bank of Communications in Hong Kong. The government has now tapped foreign investors every year since returning to the global markets in 2017, ending a 13-year absence. Under a 20 billion-yuan local-currency sale programme, the Chinese government last month sold 8 billion yuan of bonds in the first batch of a 20 billion yuan programme, pulling in 24.6 billion yuan in orders from global investors, including central banks and money managers, according to the Ministry of Finance. The final batch will be auctioned in November. The sovereign bonds will qualify for the southbound Bond Connect, a cross-border trading scheme that kicked off last month that opened the door to mainland-based investors to participate in Hong Kong’s HK$2 trillion debt market. China first issued sovereign bonds in Hong Kong in 2009 and has sold a total of 218 billion yuan up to August this year, as part of the government’s efforts to satisfy market demand and deepen the city’s financial market. Yuan-denominated sovereign bonds will enter the FTSE World Government Bond Index with a weighting of about 5.4 per cent. HSBC estimated in June the inclusion will draw up to US$150 billion of funds over time and raise foreign ownership to 14 per cent by 2024 from about 10 per cent. Foreign investors held about 18 per cent of South Korean government debt and 34 per cent of US government bonds or Treasuries.