Chinese yuan Photo:VCG
China’s Ministry of Finance (MOF) on Wednesday issued yuan-denominated sovereign bonds worth 12.5 billion yuan ($1.71 billion) in the Hong Kong Special Administrative Region (HKSAR), according to the results of tenders released by the HKSAR government.
The issuance includes 4 billion yuan for two-year bonds along with another 4 billion yuan for three-year bonds, 3 billion yuan for five-year bonds and 1.5 billion yuan for 15-year bonds.
The issuance was met with strong investor demand, achieving an oversubscription rate of 3.07 times. This year marks the 17th consecutive year that the MOF has issued yuan-denominated sovereign bonds in Hong Kong, CCTV reported on Wednesday.
The issuance of yuan sovereign bonds in Hong Kong helps improve the mechanism of the yuan bond market, enhance market depth and liquidity, provide investors with more tools and promote the yuan’s internationalization, Liang Haiming, chairman of the Hong Kong-based China Silk Road iValley Research Institute, told the Global Times on Wednesday.
Liang said that the issuance will further consolidate Hong Kong’s position as the world’s largest offshore yuan market and an international financial hub. The issuance of highly rated yuan bonds will attract more international capital, bringing stable capital inflows to Hong Kong and bolstering the international influence of its financial markets, he noted.
On February 19, the MOF issued the first batch of yuan-denominated sovereign bonds worth 12.5 billion yuan. In comparison, the MOF in 2024 issued the first batch of 12 billion yuan in sovereign bonds in March, with the second batch of 11 billion yuan being released in June last year.
Compared with the first issuance in 2024, the increased scale this year demonstrated the growing acceptance capacity and rising demand within the Hong Kong financial market for yuan-denominated bonds, reflecting international investors’ sustained interest and growing recognition of yuan-denominated assets, Song Xiangqing, vice president of the Commerce Economy Association of China, was quoted saying in a report by the Securities Times in February.
Hong Kong Financial Secretary Paul Chan Mo-po said in an official post on April 13 that Hong Kong ¬¬- backed by the motherland and leveraging the institutional strengths of the One Country, Two Systems principle – has become more stable and attractive amid current uncertainties in the global market.
Amid global headwinds, Chinese assets have become more attractive. For instance, 73 listed companies that have disclosed their first-quarter results saw Qualified Foreign Institutional Investors appear in their top 10 tradable shareholders lists as of Tuesday, the China Securities Journal reported.
When it comes to China’s appeal to overseas investors, Liang said that the current strengths of the country’s economy and capital market lie in its resilient growth momentum, vast development potential across consumption upgrading, and the new-energy and technological innovation sectors.
Following the emergence of DeepSeek, global capital has been flowing into A-share and Hong Kong-listed technology stocks, Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times, highlighting the country’s strengths in the manufacturing sector and complete industrial chain.
Liang said that China’s capital market reform continues to deepen, with improved institutional frameworks enhancing transparency and attractiveness. He added that the A-share market, characterized by high growth potential and a unique industry structure, provides global capital with diversified allocation opportunities.
Li Bin, deputy head of the State Administration of Foreign Exchange, said on Tuesday that foreign investors increased their domestic bond holdings by a net $26.9 billion from February to March, up 84 percent year-on-year. In addition to the first quarter’s results, foreign investors bought a net $33.2 billion in domestic bonds from April 1 to 18 alone.
