China unveiled recent measures to strengthen Hong Kong’s function as an offshore yuan financing hub, together with establishing a brand new yuan funding facility for banks and corporations and increasing entry to mainland traders to put money into foreign-currency bonds within the metropolis, officers mentioned.
The Individuals’s Financial institution of China (PBOC) and the Hong Kong Financial Authority (HKMA) will provide a 100 billion yuan (US$13.6 billion) liquidity facility for banks to assist their clients acquire yuan funding for one, three and 6 months to help commerce. The cross-border Bond Join scheme can even be tweaked to deepen the market.
“The prosperity and growth of the capital market are on the core and basis of Hong Kong’s standing as a world monetary centre,” PBOC Governor Pan Gongsheng mentioned on the Asian Monetary Discussion board in Hong Kong on Monday. Either side will work to broaden monetary market interconnectivity, “together with encouraging extra high-quality enterprises to listing and difficulty bonds in Hong Kong”, he added.
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Individuals’s Financial institution of China Governor Pan Gongsheng, seen throughout a press briefing in Beijing in September 2024. Photograph: Reuters alt=Individuals’s Financial institution of China Governor Pan Gongsheng, seen throughout a press briefing in Beijing in September 2024. Photograph: Reuters>
Pan additionally highlighted different doable measures to help Hong Kong, together with strengthening its function within the Larger Bay Space. He additionally talked about about growing the allocation of China’s US$3.2 trillion overseas trade reserves – or US greenback property primarily held within the type of US Treasuries and company bonds, with out elaborating.
The brand new yuan liquidity facility is an improve to an present yuan funding, which solely backs financing on in a single day foundation or over a number of days, HKMA CEO Eddie Yue Wai-man mentioned on the sideline of the discussion board. It can make corporations and banks “really feel extra comfy” to make use of yuan to settle commerce, he added.
Authorities will prolong the settlement time for transactions underneath Bond Join from Tuesday, Yue mentioned. Mainland-based traders, at present restricted to investing in yuan-denominated bonds, can be allowed to purchase securities priced in different currencies such because the US greenback and euro, he added.
Beijing can even enable extra mainland institutional traders equivalent to insurers to commerce bonds in Hong Kong, a privilege at present granted solely to banks. Yue mentioned this measure can be launched when authorities in Beijing have finalised the finer particulars of the plan.
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