Hong Kong note-issuing banks HSBC and Standard Chartered on Monday completed trades at the launch of the city’s cross-boundary bond repurchase (repo) scheme, according to the two lenders.
The cross-boundary bond repo business was launched by the Hong Kong Monetary Authority (HKMA) and the People’s Bank of China, alongside other mainland authorities, as the latest initiative to enhance the Bond Connect scheme, which would encourage more international investors to trade in yuan-denominated mainland bonds.
Under the scheme, all overseas institutional investors who put money into the onshore bond market, including those trading via the Bond Connect scheme, would be allowed to take part in the onshore repo business and to remit yuan obtained for offshore use.
“This measure will bolster offshore yuan liquidity in Hong Kong, increase overseas investors’ interest in allocating yuan assets, and promote more diversified development of offshore yuan businesses,” HKMA chief executive Eddie Yue Wai-man said on Friday.
The transactions made by HSBC and Standard Chartered reflected investors’ growing confidence in China’s capital market liberalisation and reinforced Hong Kong’s position as the leading offshore yuan hub, as Chinese bonds showed diversification benefits and relative stability.
As a bond investor, HSBC said it had already completed trades with onshore financial institutions to get yuan funding via the new repo scheme.
