2025年下半年中资境外债展望：南向通扩容：投资新机遇

Group 1: Investment Rating - The document does not mention the industry investment rating. Group 2: Core Views - The bond "Southbound Connect" may be expanded in the future, with insurance funds and other non - bank institutions likely to be included in the scope of eligible investors. The main expansion directions are the dim - sum bond market and the Chinese dollar bond market. [2][23] - In the second half of 2025, the dim - sum bond market is expected to remain strong with narrowing excess spreads. For the Chinese dollar bond market, the short - term market is volatile, and short - term participation should be cautious. [2] Group 3: Summary by Directory 1. Policy - driven, Southbound Connect Expansion is Imminent - Since the launch of the bond "Southbound Connect" in September 2021, the participation enthusiasm has been increasing. As of the end of April 2025, the balance of bonds under the Southbound Connect reached over 530 billion yuan. [15][19] - Currently, the scope of eligible investors for the bond "Southbound Connect" is small, mainly including some banks and QDII/RQDII. Since 2025, relevant policies have been continuously promoted, and it is expected that the scope of eligible investors will be expanded, with insurance funds likely to be included. [20][23] 2. Core Mechanisms of Southbound Connect: How to Invest in Overseas Bonds through Southbound Connect? 2.1 Current Main Institutional Arrangements of Southbound Connect - The trading venue is the Hong Kong bond market, mainly settled through the Central Moneymarkets Unit (CMU) of the Hong Kong Monetary Authority. - The investment scope includes all bond types issued overseas and traded in the Hong Kong bond market. - The annual total quota for the whole market is 500 billion yuan equivalent in RMB, and the daily quota is 20 billion yuan equivalent in RMB, with closed - loop management of funds. - Domestic investors must trade with qualified "Southbound Connect" market - makers approved by the Hong Kong Monetary Authority, with 22 market - makers currently. [30] 2.3.1 Trading Mechanism: Request - Quote Mechanism - Domestic investors send quote requests to overseas quote institutions through the CFETS system. Overseas market - makers reply with quotes, and domestic investors confirm the transactions. The market - makers may have a re - confirmation process, and then the transaction is completed. [34][35] 2.3.2 Custody Mechanism: Nominee Holder System, Direct Connect Custody/Global Custody Modes - Under the nominee holder system, domestic investors can choose either direct connect custody (by domestic bond registration and settlement institutions) or global custody (by domestic custody and clearing banks). The direct connect custody mode is limited to bonds registered and held by CMU, while the global custody mode has no restrictions on bond types. [36][37] 3. New Investment Opportunities under Southbound Connect Expansion 3.1 Introduction to the Hong Kong Bond Market - As of the end of 2024, the Hong Kong bond market mainly traded in G3 currencies, with corporate bonds accounting for a large proportion. The CMU - held bonds only accounted for a small part of the Hong Kong bond market, mainly in RMB and with maturities concentrated within 3 years. [53][56][59] 3.2 Dim - sum Bond Market Analysis - As of the end of May 2025, the dim - sum bond market had a stock size of nearly 2 trillion yuan, with high supplies of government bonds, financial bonds, and urban investment bonds. - For dim - sum government bonds, short - to medium - term local government bonds and long - term Hong Kong government bonds are recommended. For dim - sum credit bonds, non - urban investment and non - real - estate investment - grade bonds, especially financial bonds and TMT bonds, are worth considering. - The spread between offshore RMB sovereign bonds and on - shore treasury bonds is affected by the offshore RMB inter - bank lending rate. In 2025, the net supply of dim - sum bonds has been positive but with a slowdown in growth. The expansion of demand under the Southbound Connect may further compress the spreads. [5][71][91] 3.3 Chinese Dollar Bond Market Analysis - As of the end of May, the stock size of Chinese dollar bonds was 634.6 billion US dollars, mainly credit - type bonds with a low proportion of government bonds. - The overall yield of Chinese dollar bonds is relatively high, with spreads over the same - term US treasury bonds ranging from 100 - 150 BP (except for sovereign bonds). Short - term investment - grade financial bonds (especially non - bank financial bonds) and long - term TMT bonds are recommended. - Investment in dollar bonds needs to consider exchange rate and interest rate risks. Currently, the cost of hedging exchange rate risks is relatively high, so short - term allocation should be carefully observed. [6][101][113]