Treasury bond futures ‘a milestone’ to boost Hong Kong’s bridgehead role: CSRC chairman

Beijing is encouraging mainland China’s financial firms to use the city to go global, as well as urging Hong Kong-listed companies to list on the mainland, the head of the country’s securities regulator said on Monday as China unveiled its first offshore government bond futures. “Mainland financial institutions have been using Hong Kong to go global. There are 103 mainland fund companies, securities and futures firms setting up in Hong Kong. While some of them do not have operations in Beijing, they have shops [here],” said Wu Qing, chairman of the China Securities Regulatory Commission (CSRC), at the launch ceremony of the five-year China government bond futures. “We would like to see more dual listings with mainland firms to raise funds in Hong Kong and encourage Hong Kong firms to list in [mainland] China,” Wu said, adding that 270 mainland Chinese firms have listed in Hong Kong since 2024 and raised HK$650 billion (US$82.9 billion). Wu described the launch of the bond futures as “a milestone to boost Hong Kong’s bridgehead role”, adding that it also marked the latest opening of the mainland’s capital market for international investors. The CSRC head said regulators on the mainland and in Hong Kong were discussing how to widen the cross-border trading Stock Connect scheme, specifically the inclusion of a real estate investment trust (Reit) connect and the enhancement of the southbound Stock Connect to allow mainland investors to use yuan to trade Hong Kong-listed yuan shares. The widening of cross-border trading and listings was among the seven measures announced in a joint statement on Monday from the CSRC and Hong Kong’s Securities and Futures Commission on how to deepen ties between the two markets. The other measures included establishing a streamlined process to prompt more securities and futures professionals in Hong Kong banking to apply for mainland professional qualifications. The two regulators would also support index providers to launch more indices based on Chinese assets, as well as more exchange-traded funds (ETFs) based in the two markets. They would also support the launch of a wider range of yuan-denominated and yuan-settled futures products in Hong Kong, the statement said. The new futures contracts rose on their debut. As the market closed on Monday, the September contracts had advanced 1.2 per cent to trade at 107.645, while December contracts had advanced 1.2 per cent to 107.635. The contracts reported active turnover on debut, with 3,720 changing hands on Monday, according to data from Hong Kong Exchanges and Clearing (HKEX). The benchmark Hang Seng Index rose nearly 0.5 per cent to close at 26,009.40 on Monday. “Today, we mark another important milestone with the launch of the only offshore China government bond futures,” HKEX chairman Carlson Tong Ka-shing said at the launch ceremony. He said the new sovereign bond futures “enable international investors to open, hedge and clear positions entirely offshore, through the same accounts and workflows they already use for Hong Kong-listed derivatives”. The bond futures “further strengthen Hong Kong’s offshore yuan product suite and supports the continued internationalisation of the currency”, Tong said. “Today’s launch is far more than a new product – it marks a milestone in the maturing of our market infrastructure,” said Financial Secretary Paul Chan Mo-po, who also attended the launch ceremony. “We are building a more complete offshore renminbi ecosystem, one in which investment, pricing and risk management reinforce one another.” The treasury bond futures, which follow the adoption of the Bond Connect and Swap Connect schemes, would broaden the yuan bond market and enhance the process of internationalising the currency, Chan said. Overseas investors held 3.2 trillion yuan (US$474 billion) worth of onshore Chinese bonds at the end of June, accounting for about 1.8 per cent of the total. The new futures would be the first offshore products allowing such investors to manage risks in their Chinese treasury bond investments at a low cost. The new futures contract has a size of 500,000 yuan. Bourse operator HKEX has set a low minimum margin ratio so that investors only need to invest 7,980 yuan to trade one contract. Both HSBC and Standard Chartered said they had helped clients complete a range of trades in the government bond futures. “With Chinese government bonds playing a growing role in global portfolios, investor demand for hedge tools to manage duration and renminbi exposure is on the rise,” said Cheuk Wong, head of markets and securities services at HSBC Hong Kong. Mary Huen Wai-yi, CEO of Greater China and North Asia at Standard Chartered Hong Kong, said the lender had seen great interest in government bond futures from its foreign clients. “The launch in Hong Kong of the world’s first offshore exchange-traded interest rate futures product, based on Chinese government bonds, will further enrich the offshore yuan rates product ecosystem,” Huen said, adding that it would “reinforce Hong Kong’s unique position as a leading offshore yuan hub and international risk management centre”. Demand for yuan-denominated fixed-income assets has been rising as hostilities in the Middle East have intensified since February, and a record amount of US federal debt has prompted global investors to diversify away from the dollar. The yield on China’s benchmark 10-year government bond dropped close to a one-year low of about 1.705 per cent on Monday, while the yuan appreciated to its highest level against the US dollar in three years.

Treasury bond futures ‘a milestone’ to boost Hong Kong’s bridgehead role: CSRC chairman

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}First offshore China government bond futures rose more than 1 per cent on debut on Monday

First offshore China government bond futures rose more than 1 per cent on debut on Monday