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Clearstream is preparing to support China’s Bond Connect initiative in order to offer both direct and indirect access to China’s fixed income market.
The Deutsche Börse subsidiary described the inclusion of a selection of mainland China A-shares in benchmark emerging market indices as marking “a new and exciting chapter in the opening of the Chinese market” that would drive a substantial growth in international interest in Chinese equities.
“Mirroring the progress achieved with the Shanghai-Hong Kong Stock Connect in the equity field, the just-launched China Bond Connect represents a major breakthrough in the development of the China bond market. It will start to do for Chinese fixed income what Stock Connect has done for Chinese equities,” Clearstream stated.
Deutsche Börse and Clearstream representatives will be present at the Shanghai International Financial Advisory Council being at the end of August.
In its monthly report to clients, Clearstream outlined its ambition to use the event to cement Clearstream’s role in supplying its international expertise along the securities value chain as the Chinese market continues to open.
Marc Robert-Nicoud, CEO of Clearstream, said: “Clearstream has been a strong supporter of the liberalisation of the Chinese capital markets ever since it opened its Hong Kong office in 1991.”
“Our business is all about enabling investors and issuers to link up globally on the back of an efficient and safe infrastructure. We look very favourably on recent developments as they are in the best interest of all stakeholders Clearstream supports liberalisation of Chinese financial market.”
The offshore renminbi and comparable bonds market is valued at $100 billion, but the onshore bonds market totals as much as $7 trillion to $8 trillion, with less than two percent held by foreign investors via various quota schemes, according to Clearstream.
The Luxembourg-based international central securities depository saw its global securities financing activities drop by 16 percent year over year for July. Outstanding volume fell to €455.3 billion last month from €539.8 billion in 2016.
