Core Viewpoint - The expansion of the Bond Connect "Southbound" channel will facilitate the investment of domestic investors in offshore bond markets, allowing more non-bank institutions such as funds, brokerages, insurance, and wealth management firms to participate. This measure will take effect on August 25, 2025 [1][3]. Group 1: Expansion of Southbound Bond Connect - The Southbound Bond Connect previously targeted 41 bank-type financial institutions and qualified domestic institutional investors (QDII and RQDII) for offshore bond investments. The expansion will now include four types of non-bank institutions [3][6]. - The expansion is expected to enhance global asset allocation channels for non-bank institutions, improving investment flexibility and potential returns. It will also stimulate innovation in financial products and business development [3][4]. - The annual quota for the Southbound Bond Connect, currently set at 500 billion RMB, may be increased as more institutions participate, leading to higher demand for offshore bond assets and increased activity in the Hong Kong bond market [6][7]. Group 2: Market Impact and Future Expectations - The expansion is anticipated to inject new liquidity into the Hong Kong bond market and deepen the interconnection between domestic and foreign markets, potentially driving further policy and infrastructure optimization [3][7]. - The issuance of dim sum bonds (RMB-denominated bonds issued in Hong Kong) is projected to reach 94.4 billion USD in 2024, indicating a growing market for RMB-denominated assets [8]. - There are expectations for the introduction of a "Swap Connect" to help domestic investors manage interest rate risks associated with offshore bonds, as the current market environment presents significant interest rate volatility [10].