HKEX(HK:00388) Zheng Quan Shi Bao·2025-07-08 18:48Core Insights - The Bond Connect has significantly enhanced the connectivity between the Hong Kong and mainland China bond markets since its launch in 2017, with ongoing improvements leading to increased international participation [1][2] - As of May 2025, over 70 countries and regions have engaged with the Chinese interbank bond market, with foreign institutions holding approximately 4.35 trillion yuan in onshore bonds, reflecting a compound annual growth rate of about 12% over the past five years [2] - The recent measures announced by the People's Bank of China and the Hong Kong Monetary Authority aim to optimize and expand the Bond Connect, enhancing liquidity and competitiveness in the offshore RMB business [7][8] Group 1: Bond Connect Development - The Bond Connect has become the preferred channel for international investors to access the mainland interbank bond market, indicating a strong demand for deeper connectivity between global and onshore markets [2] - The total number of international investors participating in the Chinese interbank bond market has reached 1,169, with significant trading volumes recorded [2] - The Northbound Swap Connect has attracted 82 foreign institutions, with a total nominal principal amount of approximately 6.9 trillion yuan, showcasing substantial growth in trading activity [2] Group 2: Attractiveness of Chinese Bonds - The Chinese bond market is now the second largest globally, characterized by ample depth and liquidity, making it increasingly important in global asset allocation [4] - China's government debt-to-GDP ratio is relatively low compared to major developed economies, enhancing the appeal of its bonds [4] - The annualized volatility of onshore RMB bonds is approximately 1.3%, significantly lower than that of other developed markets, making them attractive for risk-adjusted returns [4] Group 3: Future Growth Potential - Over 30% of central banks surveyed plan to increase their holdings of RMB assets in the next five years, indicating a growing interest in Chinese bonds [5] - The expansion of the Southbound Connect is expected to facilitate greater overseas asset allocation by domestic investors, further driving growth in the bond market [5] - The current international investor participation in the Chinese bond market is only about 3%, suggesting significant room for growth as global investors seek diversification [8]