ASIA: China opens to foreign investors

China recently opened its $10 trillion bond market to foreign investors. The Chinese bond market is the third largest in the world after the United States and Japan. This “bond connect” platform aims to promote development between Hong Kong and Mainland China. It allows qualified investors in Hong Kong to buy shares of Chinese-listed companies and Chinese firms to buy Hong Kong traded stocks. This can diversify the investor base and increase market size and depth.

According to RFi Group’s data in H1 2017, only 19% of Chinese consumers hold overseas banking products, with 65% of this pool holding them in Hong Kong. In H1 2016 and H2 2016, 57% of overseas banking product holders held them in Hong Kong. This number increases to 65% in H1 2017. The opening of the Chinese market may potentially see more investment flows between China and Hong Kong.

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