Premier says mainland-HK bond trading link on the way

A bond trading link will be set up between the mainland and Hong Kong this year to further open the country's securities market, Premier Li Keqiang said on Wednesday. [Special coverage]

Speaking at the news conference after the annual session of the National People's Congress in Beijing, Li said under the planned bond trading link, overseas investors will be able to buy and sell bonds in the Chinese mainland market while offering mainland investors access to the bond market in Hong Kong.

Following Li's remarks, Hong Kong Exchanges & Clearing Ltd said that the bond trading link represents a major breakthrough in the development of the mainland capital markets, and further strengthens the role of Hong Kong as a gateway between the mainland and international markets.

The share prices of HKEx climbed 1.41 percent to close at HK$194.7 ($25) on Wednesday, while the benchmark Hang Seng Index declined 0.15 percent to 23,792 points.

The launch of a stock trading link between Shenzhen and Hong Kong, which is essentially a carbon copy of the Shanghai-HK Stock Connect, was a headline-making event three months ago.

The soon-to-be-launched bond connect puts the mainland on course to opening up its massive bond market, currently the world's third-largest with 64 trillion yuan ($9.3 trillion) of debt outstanding, in a more proactive manner.

With another gateway for international investors to trade in mainland markets and for mainlanders to invest in Hong Kong well underway, Hong Kong is well positioned to enjoy the early-mover advantage, Li said.

"This will help Hong Kong maintain its status as an international financial center, and provide Hong Kong investors with more options," Li said.

Sally Wang Chi-ming, CEO of the Hong Kong Investment Funds Association, said the bond connect is definitely a good thing for overseas investors, as well as the development of the mainland bond market.

She emphasized that the mainland bond market has already attracted many overseas investors due to its relatively high returns. Hong Kong is the first place to benefit from the opening of the bond market.

"The past few years have seen unprecedented growth in market connections between the mainland and Hong Kong, but there remains a lack of investment products," said Christopher Cheung Wah-fung, a member of the National Committee of the Chinese People's Political Consultative Conference, who is also founder and chief executive of Christfund Securities Ltd.