CHINA officially launched the southbound trading channel of its bond connect program Friday, which industry professionals regard as a further step for the country to liberalize its capital market and contribute to more balanced cross-border capital flows. The transaction turnover under the southbound trading channel, which expands domestic investors’ access to the global bond market, reached 4 billion yuan (US$619 million) on the first day, said the central bank. Over 40 mainland institutional investors completed more than 150 transactions with 11 market makers in the Hong Kong Special Administrative Region, buying a wide range of bond products traded on the Hong Kong market, data from the People’s Bank of China show. In July 2017, China commenced the bond connect program, opening the northbound trading channel to offshore investors to offer them access to the world’s second-largest bond market. To date, mainland bonds held by overseas investors via this channel amount to around 1.1 trillion yuan. The accumulated turnover of the northbound channel over the past four years reached 12.3 trillion yuan. The launch of the southbound link was an improvement of the bond connect program, making the two-way trading a closed-loop, said Guo Deqiu, a general manager with Bank of China. With other opening-up measures, such as the Shanghai-Hong Kong, Shenzhen-Hong Kong and Shanghai-London stock connect programs, Guo believed China’s capital market would see comprehensive, high-quality opening-up. The bank is one of the first batches of 41 eligible banking financial institutions designated by the central bank to participate in the trading. Standard Chartered Bank, another qualified institution, said Friday that it completed its first foreign currency purchase transaction through the southbound bond connect program. “The launch of the southbound bond connect program marks another remarkable milestone in the opening of China’s financial markets,” said Benjamin Hung, Standard Chartered’s chief executive officer for Asia. He believed that the program will further improve the structure of China’s capital markets, enhance the efficiency of the asset allocation of the country’s financial markets and promote the yuan’s internationalization. (Xinhua) | 