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China will launch the southbound leg of its Bond Connect scheme on Sep 24, allowing some domestic investors to invest in overseas bonds traded in Hong Kong, according to a statement on the website of the People's Bank of China on Wednesday.
Qualified Domestic Institutional Investor (QDII) and RMB Qualified Domestic Institutional Investor (RQDII), as well as 41 banking financial institutions among the PBOC's open market operations primary dealers are allowed to trade overseas bonds circulated in Hong Kong under the southbound link, the statement said. The total annual quota is set as CNY500 billion, with the daily quota capped under CNY20 billion, the statement said, noting that investment by QDII and RQDII will not take up the total quota.
MNI previously reported that China is likely to inaugurate the scheme in the second half of the year (see: MNI: China's Southbound Bond Connect To Fuel Dim Sum Demand). The northbound leg of the scheme launched in 2017 has attracted a total trading volume of CNY12.3 trillion in the past four years, with 78 out of the world's top 100 foreign asset management institutions participating in the scheme, according to the statement. Currently, foreign investors are holding over CNY3.8 trillion of Chinese bonds.