DBS welcomes deepening financial market ties between Hong Kong, China

It will broaden overseas investment channels for mainland institutional investors, a DBS managing director said.

DBS Hong Kong welcomes the new measures announcing deeper financial market connectivity between Hong Kong and mainland China.

In a statement on 15 January 2025, the bank said that the measures will benefit market participants, corporates, and investors alike.

“DBS Hong Kong believes the new measures can deepen the financial cooperation between Hong Kong and the Mainland, to further broaden the overseas investment channels for mainland institutional investors and enhance the attractiveness of onshore bonds, thereby consolidating Hong Kong’s status as the global offshore RMB business hub and strengthening Hong Kong’s position as an international financial centre,” said Jeremy Kok, managing director, head of global financial markets, DBS Bank (Hong Kong).

“Equipped with award-winning Northbound and Southbound Bond Connect market maker designations as well as OTC capabilities, DBS HK will continue to provide access to and support clients seeking lower cost funding and expansion in the region as their trusted financial partner,” Kok added.

On 13 January, the Hong Kong Monetary Authority (HKMA) and the People’s Bank of China (PBoC) announced new policy measures, including the introduction of the HKMA RMB Trade Financing Liquidity Facility and the enhancement of the Southbound Bond Connect by extending settlement time and supporting multi-currency bond settlements.

The HKMA RMB Trade Financing Liquidity Facility is expected to launch in late February. It will have a total size of RMB100b, with the HKMA offering 1-month, 3-month, and 6-month RMB funds. Interest rates will reference onshore interest rates plus a spread.  

Other enhancements include developing offshore RMB repo business using Northbound Bond Connect bonds as collateral; inclusion of the Northbound Bond Connect bonds as eligible margin collateral at OTC Clearing Hong Kong Limited (OTCC); and faster payment systems facilitation between the two markets.