HONG KONG, Sept. 24 (Xinhua) -- The Southbound Trading under China's Bond Connect program was officially launched on Friday, another major step in the central authorities' support for Hong Kong's development and the push for cooperation between the mainland and Hong Kong.
Bank of China (Hong Kong) (BOCHK), one of the first market makers for the program, said on Friday that it has started conducting bond trades under the program on the first day of its launch, completing 55 transactions worth 1.29 billion yuan (200 million U.S. dollars) for 27 mainland institutions.
Paul Chan, financial secretary of the Hong Kong Special Administrative Region (HKSAR) government, said at the launching ceremony of the program that realizing the two-way circulation of funds in the bond market under the premise of controllable risks is another manifestation of institutional innovation under "one country, two systems."
In July 2017, the People's Bank of China (PBOC) and the Hong Kong Monetary Authority (HKMA) jointly rolled out the northbound channel of the program. The accumulated turnover of the northbound channel over the past four years reached 12.3 trillion yuan (about 1.9 trillion dollars).
The southbound trading allows Hong Kong to further leverage its unique advantages under "one country, two systems."
During the launching ceremony, Chief Executive of the HKSAR Carrie Lam said via video that by assisting the country to improve the two-way opening-up of the bond market and the two-way cross-boundary capital flows, Hong Kong's role as a hub connecting the mainland and international markets was also enhanced.
Analysts highlighted the benefits brought by the southbound trading for Hong Kong.
"It (the southbound trading) will play a positive role in expanding the offshore capital pool in Hong Kong and promoting the development of the offshore renminbi market," said Xi Shuai, strategic planner at the Bank of China Hong Kong financial research institute.
"The southbound channel will consolidate Hong Kong's role as a gateway for capital flowing in and out of the mainland, and continue to promote its development as an international financial center and financial hub."
Liang Haiming, a Hong Kong economist, said that with the two-way opening-up for capital flow will enable Hong Kong to further integrate into the country's domestic circulation and play a bigger role as a bridge in China's "dual circulation" development paradigm.
The HKMA has appointed 13 financial institutions, including the BOCHK, as market makers for Southbound Trading under Bond Connect, and said it would review the list of designated market makers in due course to consider the need for expansion and optimization.
Chief Executive of the HKMA Eddie Yue said the HKMA will continue to work with the PBOC to improve the coverage and operation mechanism of the southbound channel to serve domestic and overseas investors and promote the healthy development of the mainland and Hong Kong financial markets. Enditem
