MANILA, Philippines — The Manila unit of Bank of China continues to provide Philippine financial institutions access to China’s fast growing economy through the Bond Connect scheme.
Deng Jun, country head of Bank of China Manila, said the bank is giving local participants the opportunity to invest in the world’s third largest bond market – the China Interbank Bond Market (CIBM) – that exceeded 90 trillion renminbi in outstanding bond volume in August.
“As China opens its market to the world, investors are gaining a deeper understanding of the investment opportunities in the country. This is driving global interest in renminbi-denominated assets,” he said.
Bond Connect is a new mutual market access scheme that allows investors from Mainland China and overseas to trade with each other through a connection between the Mainland and Hong Kong financial infrastructure institutions.
According Deng, the internationalization of RMB is creating a natural demand for RMB investments.
As the latest cross-border bond trading and settlement scheme linking the mainland China and the Hong Kong, Bond Connect has been playing an increasingly important role in enhancing two-way market access, as well as opening up the Chinese bond market.
The Chinese government has taken a series of measures to improve on the relevant mechanisms and infrastructures under the scheme, including broadening Bond Connect market maker group, enriching transaction mechanism, and increasing foreign exchange hedging options.
Additionally, China announced a three-year tax exemption for offshore investors to invest in the CIBM, which has made Chinese bonds more attractive to offshore investors.
The CIBM has drawn significant attention from global investors, making it the fastest growing bond market in the world. Renminbi-denominated assets have become one of the most appealing options for global investors, and the China bond market has grown into the third largest in the world.
BSP Deputy Governor Chuchi Fonacier said during the recent RMB Internationalization and ASEAN Local Settlements Forum in China, RMB continued to play a broader role in international trade and financial markets.
Fonacier said RMB could also be a source of financing for financial institutions as the government has been tapping the China bond market.
“With this, the debt capital market of China was tapped and has become a stable source of financing for the national government of the Philippines. In the future, we hope to see corporates and stock exchanges to use RMB more in their financial transactions,” Fonacier said.