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China to Launch Wealth Management, Southbound Bond Connects, PBOC Says
Liao Shumin
DATE:  Sep 09 2021
/ SOURCE:  Yicai
China to Launch Wealth Management, Southbound Bond Connects, PBOC Says China to Launch Wealth Management, Southbound Bond Connects, PBOC Says

(Yicai Global) Sept. 9 -- China will further open the mainland’s capital and bond markets to Hong Kong and Macao investors by launching a wealth management connect scheme and the new southbound leg of its bond connect program, Pan Gongsheng, vice governor of the People's Bank of China, said at a press briefing today.

The wealth management connect will allow individuals in the Guangdong-Hong Kong-Macau Greater Bay Area make cross-border investments in wealth management products within a closed-loop capital conduit managed by banks in the area.

In February 2019, China’s State Council published a document proposing to expand cross-border investment options for Hong Kong and mainland residents and to open up more channels for two-way investment.

China released investment planning documents this May and sought public opinion. The proposed total quota for the wealth management connect’s pilot scheme is CNY150 billion (USD23.2 billion), and the quota for individual investors is CNY1 million (USD154,700).

The bond connect program is an investment scheme linking the Chinese mainland and Hong Kong bond markets, with a northbound and southbound routes. The northbound route, which enables investors in Hong Kong to buy onshore debt, was launched in July 2017.

According to official data, total trading under the program was CNY4.81 trillion (USD744.1 billion) last year, up 83 percent from 2019. Daily trading reached CNY26.3 billion (USD4.07 billion) in August, a year-on-year increase of 35 percent.

According to a report by Hong Kong Economic Journal on Aug. 30, the southbound leg of the bond connect scheme is expected to open before National Day on Oct. 1. The initial scope will cover Hong Kong dollar and yuan bonds under the custody of the Central Moneymarkets Unit of the Hong Kong Monetary Authority.

Editor: Tom Litting

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Keywords:   Chinese Central Bank