Only 22 minutes after opening Monday morning, 2.15 billion yuan (around 320 million U.S. dollars) of bonds had been purchased by overseas investors rushing to increase presence on the world's third largest bond market under the Bond Connect between the Chinese mainland and Hong Kong.
It was only a glimpse of brisk trading on the first day for the over-67-trillion-yuan market, which is still growing rapidly and opening wider across the globe.
The Chinese authorities approved the bond link in mid-May, allowing investors from both sides to trade bonds on each other's interbank markets. Northbound trade started Monday, without caps on investment volume.
With the launch, which came after two similar stock connect programs initiated in 2014 and 2016, respectively, China has secured another solid step forward in its progressive but persevering drive to internationalize its financial sector and currency.
Addressing the opening ceremony, Pan Gongsheng, deputy governor of the People's Bank of China, said connectivity and integration of financial markets on both sides would be further improved, expanding the market size of Hong Kong and building easier investment channels to the mainland.
China's bond market boomed during the past decade but access for overseas investors is still limited, which has been accentuated as a more global yuan has stimulated demand for yuan-denominated assets.
Although an immediate, enormous boost will be unlikely, the bond connect will become a surefire driving force for the country's financial opening up.
The Beijing-based investment bank China International Capital Corporation (CICC) said in a research note that the initial inflows might be modest but it "signifies another step forward in opening up China's capital market and allowing mutual capital-market access between China and the rest of the world."
"It is a milestone in the internationalization of the RMB because it will greatly enlarge the pool of investable assets denominated in RMB as global investors will be able to hold and trade more RMB-denominated assets," said Ivan Chung, associate managing director at Moody's.
The bond link will also help the increasingly open Chinese market to gain more global recognition. (Source: Xinhua News)
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