They were helped by 20 banks and brokerages which acted as
dealers, including HSBC , Standard Chartered ,
Citi and Chinese banks such as Industrial and Commercial
Bank of China and Bank of China .
Aside from helping offshore investors to manage interest
rate risk and lower financing costs, the new scheme would
improve efficiency of clearing and capital usage, said Haifeng
Xu, deputy chief executive at Bank of China (Hong Kong) Ltd.
Xu added that in recent years mainland Chinese and Hong Kong
regulators had been continually optimising Connect schemes,
expanding channels for offshore investors to invest in onshore
markets, making the process more convenient.
Monday's debut also came amid growing expectations of a
policy rate cut from China's central bank.
"In a falling rate cycle investors may want to tactically
hedge for a shorter period of time using interest rate swaps.
It’s important to have such tools as they allow for more
flexibility on positioning our portfolios," said Freddy Wong,
head of Asia-Pacific fixed income at Invesco based in Hong Kong.
Foreign investors held 3.21 trillion yuan worth of bonds
traded in China's interbank bond market as of the end of March,
equivalent to about 2.5% of the entire market's outstanding
bonds under custody, according to official central bank data.
($1 = 6.9121 Chinese yuan renminbi)
(Reporting by Shanghai, Beijing and Hong Kong newsroom; Editing
by Simon Cameron-Moore and Mark Potter)
(adds debut day trading volume, investor comments)
SHANGHAI, May 15 (Reuters) - Hong Kong's stock exchange
on Monday launched a new Connect scheme linking the financial
hub with the mainland which offers access to interest rate
derivatives, helping offshore investors in Chinese bonds hedge
their exposure.
The interest rate Swap Connect scheme will also help promote
the yuan currency's global status, Hong Kong Exchanges &
Clearing Ltd (HKEX) CEO Nicolas Aguzin said.
More than 25 offshore investors traded onshore renminbi
(RMB) interest rate swaps with a notional value exceeding 8.2
billion yuan ($12.0 billion) on the day of debut, according to
data from HKEX.
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