Hong Kong to launch China treasury bond futures, cementing its role as ‘world’s leading offshore renminbi hub’

Bourse operator Hong Kong Exchanges and Clearing (HKEX) plans to launch China treasury bond futures in Hong Kong, “cementing the city’s role as the world’s leading offshore renminbi hub”.

The futures will be a part of HKEX’s yuan and China product ecosystem, which includes the MSCI China A50 Connect Index Futures and the Swap Connect. The futures will help regional and global investors interested in accessing China to more effectively manage their interest rate and investment risks, the bourse operator said.

“The launch of treasury bond futures is an exciting new milestone that adds to HKEX’s expanding suite of China-related risk-management tools, as well as our overall fixed-income and currency offering, providing investors with even greater choice and opportunity,” Nicolas Aguzin, HKEX’s CEO, said in a statement on Friday.

“These unique new T-bond futures will help drive market liquidity and support the further development of Hong Kong’s renminbi ecosystem, cementing the city’s role as the world’s leading offshore renminbi hub.”

The futures are expected to support greater international participation in China’s equities and fixed-income markets, and further broaden investment and risk-management opportunities in Hong Kong, HKEX said.

Hong Kong’s Securities and Futures Commission (SFC) said HKEX is making preparations for the launch, including proposing amendments to relevant rules. The bourse operator will announce the details and the launch date as soon as it is practical, the securities regulator said on Friday.

“This is a key milestone in developing Hong Kong as a premier risk-management centre, especially for hedging equities and fixed-income products with mainland assets underlying,” said Julia Leung, the SFC’s CEO.

HKEX has also added Indonesia Stock Exchange (IDX) to its list of recognised bourses, it said in a separate statement on Friday. This will allow companies with a primary listing on IDX’s main board to apply for a secondary listing in Hong Kong.

“IDX is home to many of Indonesia’s state-owned enterprises, as well as some of the region’s most pioneering technology, consumer and healthcare innovators,” said Katherine Ng, HKEX’s head of listing. “This addition will support potential cross-listings, providing domestic Indonesian companies with access to a wider regional and global investor base, opening up new opportunities for growth and enhanced market visibility.

HKEX’s Aguzin. Photo: Elson Li

“This will also enrich HKEX’s market offering, providing investors with a wider selection of investment opportunities, reinforcing Hong Kong’s role as Asia’s premier international financial market.”

The Indonesian exchange’s inclusion comes after HKEX added Saudi Exchange, or Tadawul, to its list of recognised bourses in September.

Hong Kong’s bourse operator has been working to attract international listings, opening an office in London this month after opening one in New York in June.

The city’s haul from initial public offerings has hit a two-decade low, and regulatory improvements must continue to overcome ongoing headwinds expected in 2024, according to a report by EY.

Funds raised by share listings in Hong Kong declined 59 per cent year on year to HK$41.3 billion as of November 17, according to the report, released earlier this week. The city has seen a total of 61 companies list this year, a year-on-year decline of 19 per cent.