China and Hong Kong launched a so-called “Bond Connect” scheme as part of measures to open up the mainland to international investors.
The move is expected to greatly increase foreign participation in China´s debt market as it means overseas investors will no longer need to have an onshore account to purchase Chinese bonds.
It follows a similar connect scheme that has already been launched for equities as well as MSCI´s recent decision to include Chinese stocks in its emerging markets index for the first time.
Early trading through Bond Connect was buoyant, with Citigroup, HSBC, Standard Chartered, BNP Paribas, Deutsche Bank and Bank of China known to be among its first participants.
At the launch ceremony of Bond Connect, a screen indicated that bonds worth 2.15bn yuan ($295 million) had been acquired within the first 22 minutes of trade.
Faced with a weaker domestic economy, the Chinese authorities hope that drawing foreign investment into the country will help prop up growth.
For the time being, the authorities are only allowing the Bond Connect scheme to be used for overseas investors to tap Chinese markets, rather than enabling Chinese institutions a more direct link to pursue their own global investment ambitions.