Stock Connect

Bond connect scheme favourite to follow Shenzhen-Hong Kong stock trading link, say analysts

PUBLISHED : Monday, 05 December, 2016, 9:23pm
UPDATED : Monday, 05 December, 2016, 10:57pm

A bond connect scheme may well be the next cross-border trading link between Hong Kong and mainland markets, according to industry players.

Hong Kong Exchanges and Clearing chairman Chow Chung Kong said on Monday the local bourse would continue to explore the possibility of new connect schemes to enable trading in different asset classes between Hong Kong and the mainland.

While Chow did not say which particular asset classes are in the frame, it seems market participants are most in favour of a cross-border bond trading scheme.

“If there was a new connect scheme to allow international investors to buy Chinese bonds that would probably be the easiest to manage. Bond trading is quite similar to trading equities,” said Keith Pogson, a senior partner of accounting firm EY.

Hong Kong-Shenzhen share trading link launches

Brett McGonegal, chief executive of Capital Link International, is also in favour of a bond connect link.

“China needs to develop a bond market very quickly to help grow the country on debt financing rather than equity . With that in mind, the next connect scheme should be a bond connect,” he said.

Chow was speaking at the launch ceremony of the stock connect scheme between Hong Kong and Shenzhen, which allows investors to conduct cross-border trading of shares listed in both markets. The scheme came two years after the launch of a link between the stock markets of Hong Kong and Shanghai.

HKEX chief executive Charles Li Xiaojia has previously mentioned the idea of an IPO connect scheme to enable cross-border listings, but Pogson said that would need a lot more time to study.