“We have contacted a wide range of international institutional investors in recent months to introduce the 5-year China government bond futures, and have received a very positive response from them,” said Kevin Fan, HKEX’s head of fixed income and currency product development, in a media briefing on Thursday.
He added that many of these international institutional investors had been actively trading in the Chinese onshore bond market, which had reached 200 trillion yuan as of June, making it the world’s second largest after the US.
Foreign investors held 3.2 trillion yuan of onshore Chinese bonds at the end of March, accounting for 1.6 per cent of the total.
The new futures will be the first offshore products allowing such investors to manage risks in their Chinese treasury-bond investments at a low cost, he said.
At present, international investors need a quota under the Qualified Foreign Institutional Investor (QFII) programme to trade onshore bond futures. HKEX’s offshore sovereign bond futures will allow international investors without QFII quotas to trade the contracts in Hong Kong, either to hedge risks or as an investment.