PBOC Expands Southbound Bond Connect Quota to RMB 800 Billion

On Tuesday, People’s Bank of China Governor Pan Gongsheng revealed that expanding the Southbound Bond Connect quota will strengthen financial collaboration across the Guangdong-Hong Kong-Macau Greater Bay Area.

He indicated that the annual quota will increase from 500 billion yuan (approximately HK$577 billion) to 800 billion yuan. Additionally, Southbound Connect bonds will now qualify for repurchase support, the product lineup will broaden to include Hong Kong‑dollar bonds and yuan‑linked instruments, and the scope will be extended to Macau’s bond market.

At the Hong Kong Financial Infrastructure Conference & Bond Connect Summit, Pan noted that the range of offshore yuan bonds eligible as collateral will be widened to enhance yuan preservation, hedging, and investment options. He also voiced full support for Hong Kong’s development of a comprehensive financial trading platform.

He explained that the China Foreign Exchange Trade System will collaborate with the Hong Kong Monetary Authority and the Hong Kong Securities and Futures Commission to elevate Bond Connect into an operating entity of a trading platform, positioning it as a key financial market infrastructure in Hong Kong that offers trading services for bonds, currencies, foreign exchange, and other markets.

Looking forward, Pan affirmed that regulators will back Hong Kong’s efforts to build a diversified financial market aligned with demand, reinforcing its role as an international asset‑ and wealth‑management hub. This agenda includes the forthcoming launch of five‑year offshore yuan government‑bond futures to aid risk management in the offshore market.

Pan observed that the issuance of Chinese sovereign and high‑quality bonds in Hong Kong has risen markedly, with numerous governments and corporations issuing dim sum bonds, a development that is significantly propelling the growth of Hong Kong’s bond market.

Amid global interest‑rate and inflation volatility, Pan highlighted that Chinese bonds provide relative stability and lower volatility, drawing international investors to allocate capital. Coupled with comparatively low yuan financing costs, he predicts that the Hong Kong yuan bond market is poised for rare development opportunities and will attract additional international enterprises seeking financing.

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