China News Service, Hong Kong, September 9th (Reporter Wang Jiacheng) The Chief Executive of the Hong Kong Special Administrative Region Carrie Lam revealed on the 8th that the Shenzhen Municipal Government will become the first mainland municipal government to issue offshore RMB bonds in Hong Kong. The bonds are expected to be launched next month.
Several experts said in an interview with a reporter from China News Agency on the 9th that the relevant measures are conducive to enriching Hong Kong’s bond products, strengthening Hong Kong’s status as a financial center, and boosting the internationalization of the renminbi.
Associate Professor Zhuang Tailiang of the Department of Economics of the Chinese University of Hong Kong said that as an international financial center, Hong Kong is also a financial supermarket. However, Hong Kong's financial strength lies mainly in four areas, including banks, stock markets, foreign currency markets and wealth management.
Other aspects, such as bonds, are slightly weaker.
The reason is that the Hong Kong Special Administrative Region government has seldom issued bonds in the past due to its sufficient fiscal reserves. Products such as silver bonds and inflation-linked bonds (iBond) mainly hope to help citizens manage money and make money; while Hong Kong banks are mature and large institutions generally require funds. Once the bank has solved it, bonds are also rarely issued.
Therefore, as a whole, there are very few bond products in Hong Kong.
He pointed out that the Shenzhen Municipal Government’s issuance of offshore renminbi bonds in Hong Kong this time will help enrich Hong Kong’s bond products, pave the way for the “Southward Link” of bonds, and at the same time strengthen the acceptance of renminbi.
"The internationalization of the renminbi requires the introduction of the renminbi to allow more people to use the renminbi, such as the Shanghai-Hong Kong Stock Connect, Hong Kong can directly use the renminbi to buy mainland stocks, and the renminbi bonds to be issued will expand the return channel of renminbi."
Mai Cuicai, associate professor of the Department of Finance and Policy Studies at Hong Kong Baptist University, also said that whether overseas institutions holding RMB have channels for capital investment is the focus of promoting RMB internationalization.
Bonds are a special type of investment product with lower risk than stocks. Although Hong Kong can return offshore renminbi to the mainland through the Shanghai-Hong Kong Stock Connect, bonds will still be chosen if funds do not want to face too much risk.
In addition, if Hong Kong wants to further strengthen its position as an offshore center for the renminbi, the issuance of the bond will also bring benefits.
Regarding Shenzhen, Mai Cuicai continued that the issuance of the bond will also help expand local fiscal revenue.
In fact, in the past, the China Development Bank also issued national bonds in Hong Kong. The Shenzhen Municipal Government issued bonds as a local government, and the risk rating would be different from that of national bonds.
However, Shenzhen is a city known to international investors, and it has the advantage of trying first. The issuance of bonds this time can also serve as a model for other cities in the Mainland.
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