Group 1 - The Macau government is promoting the development of the modern financial industry and strengthening the bond market infrastructure to enhance the ecosystem of the Macau bond market [1] - The Central Securities Depository (CSD) in Macau is undergoing a comprehensive upgrade, with the new Investment Fund Law effective from January, which aims to protect investors' rights and boost confidence in the bond market [1] - MCSD, as the core infrastructure operator of the Macau bond market, is committed to providing secure and robust financial services to market participants, aiming for high-quality and sustainable development [1] Group 2 - By 2025, the Ministry of Finance has issued RMB government bonds in Macau for four consecutive years, increasing the issuance scale and introducing long-term bond varieties [2] - The CSD in Macau has directly connected with the Central Moneymarkets Unit (CMU) in Hong Kong, facilitating international investors' participation in the Hong Kong-Macau bond market [2] - The settlement amount for the CSD and CMU connection reached 10 billion Macau Patacas by the end of 2025, with over 140 transactions completed, indicating significant growth in trading data [2] Group 3 - The direct connection has significantly increased the issuance and subscription scale of Macau bonds, with about 50% of the investment subscriptions coming from CMU members through bilateral connections [3] - The collaboration between CSD and CMU has led to a substantial increase in market participation and activity, enhancing the integration of financial infrastructures between Hong Kong and Macau [3] - The ongoing cooperation is expected to promote the prosperity of the Guangdong-Hong Kong-Macau Greater Bay Area and strengthen the competitive advantage of Hong Kong and Macau as international financial hubs [3]

来源：中国新闻网 澳门金管局：港澳债券市场直接联网一周年效果显著 中新社澳门1月21日电 (记者 郑嘉伟)澳门金融管理局(简称"金管局")行政管理委员会代主席黄善文21日 表示，澳门中央证券托管系统(CSD)与香港债务工具中央结算系统(CMU)直接联网一周年效果显著，交 易数据持续增长，截至2025年底结算金额达100亿等值澳门元。 当日上午，2025年度澳门债券市场奖项颁发仪式在澳门科学馆举行，黄善文在颁发仪式上总结澳门2025 年债券市场发展情况时作上述表述。 2025年1月21日，CSD与CMU正式启动直接联网，实现澳门债券市场基础设施首次与境外中央证券托管 系统对接，为国际投资者提供参与港澳债券市场的便利渠道。一年来，联网业务完成逾140笔一级和二 级市场交易。 黄善文指出，在直接联网机制的助力下，澳门债券发行认购规模大幅提升、交易量稳步增长、参与者日 益多元。2025年度国家财政部及地方政府在澳门发行的债券中，约50%的投资认购来自CMU会员通过 双边联网进行，包括对冲基金、资产管理公司等市场买方投资机构。通过直接联网全面提升市场的运作 效率与整体吸引力，有助于澳门成为更多优质债券可选发行地之一。 ...

Core Viewpoint - The recent approval of 18 brokerages for non-financial corporate debt financing tool underwriting qualifications marks a significant step in the development of China's bond market, enhancing the service quality for the real economy and increasing direct financing's share [1][5]. Group 1: Qualification Expansion - 18 brokerages have been approved, forming a clear three-tier business structure, reflecting regulatory precision in managing bond underwriting [2][3]. - Six brokerages, including Caitong Securities and Huatai United, have obtained general lead underwriter qualifications, allowing them to independently lead various debt financing products [2][3]. - One brokerage, Zhongyin Securities, has secured a special lead underwriter qualification focused on technology innovation debt financing tools, benefiting from policy support [3][5]. Group 2: Market Dynamics - The entry of these 18 brokerages is expected to disrupt the existing market structure, which has been dominated by large banks and a few leading brokerages, where brokerages previously held less than 30% of the lead underwriting qualifications in the interbank market [5][6]. - The new qualifications enable brokerages to independently participate in the interbank market, previously requiring collaboration with banks, thus allowing them to retain a larger share of underwriting fees [5][6]. Group 3: Business Opportunities - The qualification expansion provides brokerages with broader opportunities in fixed income business, allowing them to build a full-chain service capability from issuance to trading and market-making [7]. - The diverse range of non-financial corporate debt financing tools, including short-term financing bonds and medium-term notes, complements the existing products in the exchange market, enhancing the overall bond service system [7][8]. - The competition in the bond underwriting market is expected to intensify, leading to a more reasonable underwriting fee structure and providing issuers with more options [8]. Group 4: Future Implications - Leading brokerages with strong capital and risk control systems are likely to dominate high-quality projects, while smaller brokerages may need to adopt differentiated strategies to survive [8]. - The approval of qualifications is not a permanent solution; ongoing regulatory oversight will require brokerages to enhance their risk management and pricing capabilities to capitalize on the benefits of their new qualifications [8].

Core Insights - The "Southbound Bond Connect" has marked its fourth anniversary, enhancing the connectivity and integration of financial markets between mainland China and Hong Kong, while providing new opportunities for mainland investors to access global markets [1][4] - The launch of "Southbound Bond Connect" is seen as a significant milestone in achieving mutual access between the north and south of China's bond markets, solidifying Hong Kong's position in bond financing [1][4] Market Performance - As of the end of August 2023, there are 971 bonds under the "Southbound Bond Connect" with a total balance of 574.21 billion yuan, reflecting a year-on-year increase of 21% in custodial balance [4] - The continuous policy support from the People's Bank of China and the Hong Kong Monetary Authority has been crucial for the growth of the "Southbound Bond Connect" [4] Investment Opportunities - The "Southbound Bond Connect" allows mainland investors to diversify their portfolios by investing in various currencies, including Hong Kong dollars, Renminbi, and other foreign currencies [5] - The expansion of the "Southbound Bond Connect" to include more non-bank financial institutions is expected to enhance liquidity and activity in the Hong Kong bond market [7] Institutional Development - Participation in the "Southbound Bond Connect" is viewed as a way for domestic institutions to enhance their international operational capabilities and improve investment decision-making and risk management [6] - The recent optimization measures announced by the People's Bank of China aim to facilitate easier access for mainland investors to multi-currency bonds and extend settlement times [7] Future Outlook - The offshore Renminbi bond market is expected to continue to grow, with the cost of "dim sum bonds" remaining lower than that of US dollar bonds, making them more attractive for issuers [8] - The increasing demand from domestic investors for overseas asset allocation, combined with supportive policies and improved infrastructure, is gradually revealing the market potential of the "Southbound Bond Connect" [8]

Core Viewpoint - The implementation of the new rules for foreign institutional investors in the Shanghai Stock Exchange bond market is expected to enhance foreign investment scale and provide diverse funding sources for domestic bond issuers, promoting the long-term development of the bond market and accelerating the internationalization of the RMB [1][2]. Group 1: Implementation Details - The new rules require foreign institutional investors to appoint qualified commercial banks as custodians and domestic securities firms with membership in the Shanghai Stock Exchange as trading participants, with each securities account designated to only one trading participant [2]. - Foreign institutional investors are allowed to participate in various bond types, including exchangeable and convertible corporate bonds, asset-backed securities, bond lending, related derivatives for risk management, and bond funds, including exchange-traded bond index funds [2][3]. - Foreign institutional investors must also appoint domestic securities firms with qualifications as settlement participants to handle settlement operations [3]. Group 2: Market Impact - As of the end of May, the total custody balance of China's bond market was 139.1 trillion yuan, with foreign institutions holding 3.74 trillion yuan, accounting for 2.7% of the total [3]. - The new rules clarify the types of bonds that foreign institutional investors can engage with, particularly highlighting exchangeable and convertible corporate bonds, which are distinct from those in the interbank market, thus providing new asset allocation opportunities for foreign investors [3]. - The inclusion of bond funds in the investment scope for foreign investors is seen as a potential entry point, with index bond funds aligning with foreign investors' preferences and presenting lower entry barriers [4]. Group 3: Future Outlook - The ongoing development of the bond market's openness and the introduction of new policies are expected to continuously enhance foreign participation in the domestic bond market [4][5]. - The Shanghai Stock Exchange aims to further refine bond trading regulations to create a more favorable investment environment for both domestic and foreign investors, thereby better serving the real economy and establishing a new framework for high-quality development in the bond market [5].

1. Report Industry Investment Rating No information about the report industry investment rating is provided in the content. 2. Core Viewpoints of the Report - Southbound Connect is an important exploration of China's financial market interconnection. Banks' proprietary trading is the most important investor under the current mechanism and is expected to expand. The annual quota for Southbound Connect is RMB 50 billion equivalent, and investors can choose either multi - level direct connection custody or domestic custody and clearing banks to hold their bond assets, with strict cross - border capital supervision. - As of the end of 2024, the total scale of the Hong Kong bond market exceeded USD 900 billion. It includes the offshore RMB bond market, the Hong Kong dollar bond market, and the Asian G3 currency bond market. G3 currency bonds, especially US dollar bonds issued by Chinese - funded institutions, are an important part of the Hong Kong market. - In the future, with the expansion of the scope of institutions, Southbound Connect will become an important starting point for domestic institutions' overseas bond investment. It is recommended to actively seize overseas opportunities and carefully manage exchange - rate risks [1]. 3. Summary According to Relevant Catalogs 3.1 China's Financial Market Opening and the Birth of Bond "Southbound Connect" - China's capital market opening process can be divided into three stages: "early opening attempts - expansion of cross - border investment channels - capital market interconnection". Bond "Southbound Connect" is an important exploration in the interconnection stage. - In 2016, the concept of Bond Connect was first proposed. In 2017, Northbound Connect was officially launched, and in 2021, Southbound Connect was launched. Since 2025, regulators have repeatedly mentioned Southbound Connect, clarifying that investors will be expanded to four types of non - bank institutions: securities firms, funds, insurance, and wealth management [4]. 3.2 Analysis of the Bond Southbound Connect System - Participants in Southbound Connect include market - makers and investors. Banks' proprietary trading is the most important investor under the current mechanism. The trading service variety is initially spot bond trading, and the investable bonds are all bond types issued overseas and traded in the Hong Kong bond market. - The annual quota for Southbound Connect is RMB 50 billion equivalent, and the daily quota is RMB 20 billion equivalent. Domestic investors participate in Southbound Connect transactions through the request - for - quote method. - Southbound Connect adopts the nominee holder system. Investors can choose to hold their bond assets through multi - level direct connection custody or domestic custody and clearing banks, with strict cross - border capital supervision. The expansion of Southbound Connect is beneficial for optimizing the investor structure [5]. 3.3 Introduction to the Hong Kong Bond Market - Classified by currency, the Hong Kong bond market includes the offshore RMB bond market, the Hong Kong dollar bond market, and the Asian G3 currency bond market. The Hong Kong dollar bond market has grown steadily in recent years; the offshore RMB bond market expanded significantly in 2024; the issuance scale of the G3 currency bond market rebounded in 2024, with Chinese - funded issuers being the main ones. - Classified by issuer, the Hong Kong bond market can be divided into (quasi -) sovereign bonds and corporate bonds. The former includes Hong Kong government bonds, bonds issued by the Hong Kong Monetary Authority, bonds issued by mainland (quasi -) sovereign institutions, and bonds issued by overseas (quasi -) sovereign institutions. The latter includes bonds issued by recognized institutions, public institutions, and private institutions [6].

Core Viewpoint - The expansion of the "Southbound Bond Connect" provides new investment channels for non-bank financial institutions, enhancing their overseas asset allocation capabilities and increasing the liquidity and activity of the Hong Kong bond market [1][2][3]. Group 1: Expansion of Participation - The "Southbound Bond Connect" now includes non-bank financial institutions such as brokerages, insurance companies, and asset management firms, previously limited to banks and qualified domestic institutional investors (QDII) [2][3]. - This expansion allows domestic non-bank institutions to invest in global bond markets, improving their investment returns and risk-reward ratios, especially given the current low yields in the domestic bond market [2][3]. Group 2: Benefits for Non-Bank Institutions - The expansion is expected to alleviate the "asset shortage" pressure faced by non-bank institutions, particularly in the context of higher yields in the US and European markets compared to domestic rates [3]. - For instance, the 10-year government bond yields are 1.64% in China, 4.34% in the US, and 3.24% in the Eurozone, while traditional domestic life insurance products have a preset rate of 2.5% [3]. Group 3: Opportunities for Brokerages - Brokerages stand to benefit from multiple growth points, including enhanced proprietary investment returns and diversified asset allocation through high-yield bonds [4]. - They can also develop asset management products linked to overseas bonds, catering to high-net-worth clients and institutional investors [4]. Group 4: Optimization of Offshore Repo Mechanism - The optimization of the offshore repo mechanism allows for a broader range of currencies, enhancing the liquidity and attractiveness of onshore RMB bonds [6]. - This change is expected to deepen the interconnection between mainland and Hong Kong bond markets, facilitating the two-way flow of capital and promoting further opening of the bond market [6]. Group 5: Strategic Implications - The collaboration between "Southbound Bond Connect" and the "Hong Kong Stock Connect" is anticipated to create a closed-loop for asset allocation, accelerating the internationalization of the RMB [7].

Core Viewpoint - The development of the bond market in Macau is a key policy focus for the local government, aimed at enhancing financial services and promoting economic diversification [1] Group 1: Bond Market Development - The 2025 Bond Connect Anniversary Forum was held in Hong Kong, focusing on the development of the Chinese bond market and the investment value of RMB assets globally [1] - Macau's bond market has a strong demand for connectivity and internationalization compared to other regions, with efforts to connect with international central securities depositories [1][2] - The issuance of RMB bonds in Macau began in 2019, with the first issuance of 2 billion RMB government bonds led by Bank of China Macau [1][2] Group 2: Infrastructure and Services - The establishment of the Central Securities Depository (MCSD) in December 2021 has created a structured bond market in Macau, with local and foreign banks participating in underwriting [2] - The MCSD provides various services including registration, custody, and settlement, and has facilitated the issuance of bonds listed outside Macau [2][3] - As of May 2025, the total value of debt securities under MCSD custody exceeded 100 billion MOP, with issuers including the Ministry of Finance and local banks [2] Group 3: Future Prospects - The MCSD aims to enhance its systems to provide efficient delivery versus payment (DVP) services and connect with international central securities depositories [3] - The bond issuance mechanism in Macau is evolving, with a focus on high-rated bonds and the introduction of green and ESG-themed bonds [3][4] - The revised financial legal framework in Macau has shifted from an approval system to a registration system for bond issuance, streamlining the process [4]