How Bond Connect could open China’s onshore markets

Author: Ashley Lee | Published: 29 Apr 2015

International investors’ only access point to China’s domestic bond markets until now has been through the RQFII [renminbi qualified foreign institutional investor] programme. A potential Bond Connect could open the market.

The RQFII scheme was introduced in 2011 to allow institutional investors access to China’s interbank bond market. It was originally for Hong Kong investors only, but quotas have now been granted to countries vying to become renminbi hubs, including Qatar, Paris, Frankfurt and Canada.

Another step to opening the market may be the introduction of a Bond Connect, following the recent success of the Hong Kong – Shanghai Stock Connect.

But it’s unclear how that would operate. Panellists speaking at the Asia Securities Industry and Financial Markets Association’s (Asifma) offshore renminbi conference yesterday noted that the Stock Connect structure, which has worked for equities, may not necessarily work for bonds.

Lachlan Campbell, COO at fixed income...