First Fully Electronic China Bond Connect Trades Executed Through Tradeweb

One Country, Two Systems to Power HK: Lam

"It's only a matter of time before we see bonds also included in worldwide indices", said BNP Paribas Head of Global Markets for China, Lai Changgeng. Deutsche Bank AG upgraded shares of China Unicom (Hong Kong) from a "hold" rating to a "buy" rating in a research report on Wednesday, March 15th. This is below the global norm of about 10 percent, BNP Paribas said.

HSBC Holdings and an asset management unit of Bank of China became the first institutions to trade using the scheme, with about $300m worth of bonds purchased in early trading.

Still, the move was welcome by Standard Chartered's John Tan, head of financial markets for Greater China and north Asia.

French bank BNP Paribas, named a market-maker for the new scheme, said that in the long-term it expects it to "boost foreign holdings of Chinese bonds from a current 2% closer to the global norm of about 10%".

Dubbed "Bond Connect", the trading platform will operate alongside two existing cross-border stock connect programs, the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect. "As such, the ratings will not be as key a driver for investment, but rather one's views on the renminbi, capital flows into and out of China, monetary policy and potential for inclusion of renminbi-denominated government bonds in major global bond indices".

Chinese President Xi Jinping swore in Hong Kong's new leader on Saturday with a stark warning that Beijing would not tolerate any challenge to its authority in the divided city, in his strongest speech yet amid concern about what some perceive as increased meddling by Beijing.

Bond Connect does away with onerous requirements for outsiders and eases worries about taking profits out of China, but downsides include worries about the depreciating yuan and reliability of China's domestic credit rating agencies. Retail investors can't buy Chinese debt like they could scoop up an American treasury bond.

"This is a good start and is in line with market expectation", said Jasper Lo Cho-yan, the chief strategist at King International Financial Holdings.

The Bond Connect programme is Beijing's latest attempt to open up its financial markets and attract foreign capital.

Officials banged a gong and clinked glasses of champagne on Monday morning as they officially kicked off trading on the long awaited Bond Connect link.

"The scheme not only provides an additional channel for worldwide investors to tap into the world's third largest bond market, but also reinforces Hong Kong's strategic importance as the gateway between China and the rest of the world", said Benjamin Hung, CEO for Standard Chartered China and North Asia.

HKEX chief executive Charles Li Xiaoja said the local bourse would introduce southbound trading when there is a market demand for it. Institutional investors own 1.21% of the company's stock.

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