国泰海通｜固收：债券“南向通”投资手册：政策优化但限制仍存

Core Viewpoint - The expansion of the "Southbound Bond Connect" to include non-bank financial institutions enhances the overseas bond investment channels and asset allocation flexibility for domestic institutions, although there are still limitations on quotas and investment scope [1][3]. Group 1: Market Overview - The "Southbound Bond Connect" is a crucial mechanism for interconnection between the mainland and Hong Kong bond markets, allowing mainland investors to efficiently allocate overseas bond assets. It was launched on September 24, 2021, to provide a convenient channel for domestic institutional investors to invest in overseas bonds through the Hong Kong bond market [1]. - Since its inception, the Southbound Bond Connect has continuously broadened the overseas investment channels for domestic institutions, optimizing asset allocation choices and aiding the internationalization of the Renminbi. As of July 2025, the business balance conducted through this mechanism is approximately 556.44 billion yuan [1]. Group 2: Operational Mechanism - The operational mechanism of the "Southbound Bond Connect" includes qualified institutional approval, quota management, and settlement mechanisms. The investment scope covers low to medium-risk, non-structured bonds or products issued overseas and traded in Hong Kong. All qualified institutions must comply with the application, approval, and reporting processes as required by the central bank and regulatory authorities [2]. - The annual total quota is set at 500 billion yuan, with investment restrictions on certain types of bonds, such as municipal investment bonds [2]. Group 3: Recent Developments - In 2025, the Southbound Bond Connect will see significant expansion, with non-bank financial institutions such as brokerages, funds, wealth management, and insurance companies being included in the pilot program. This diversification of investor types is expected to enhance liquidity and depth in the Hong Kong bond market [3]. - The offshore repurchase agreements will support multi-currency operations and allow for the secondary circulation of pledged bonds, significantly improving market efficiency and facilitating diversified asset allocation and cross-border capital operations [3]. Group 4: Investment Value Analysis - An analysis of the yield comparison between domestic and foreign bonds, along with the divergence in interest rate trends between China and the U.S., indicates that overseas bonds present significant investment value. As policies continue to improve, the Southbound Bond Connect is expected to become a preferred channel for overseas bond investments, aside from the Qualified Domestic Institutional Investor (QDII) model [4]. - Currently, the yield on bonds available through the Southbound Bond Connect is generally higher than that of domestic bonds, with investment targets involving more debt products in currencies such as USD and HKD, making the overall returns attractive [4].