A recent announcement by the People’s Bank of China (PBOC) relaxes the rules which apply to foreign institutional investors accessing the domestic bond market in China. The Announcement on Issues relating to Investment by Foreign Institutional Investors in Interbank Bond Market (Announcement No. 3) (the Announcement) was released on 17 February 2016 with immediate effect.
Prior to the Announcement, access to China’s interbank bond market (CIBM) was limited to Foreign Central Bank-Type Institutions (including foreign central banks or monetary authorities, international financial organisations and sovereign wealth funds), qualified foreign institutional investors (QFIIs) and RMB qualified foreign institutional investors (RQFIIs).
Following the Announcement, most types of overseas financial institutions will be eligible to invest in the CIBM, including commercial banks, insurance companies, securities companies, fund management companies and asset management companies, and medium to long term investors such as pension funds and charity funds. Whilst there are no specific guidelines or eligibility criteria published for foreign institutional investors to purchase CIBM bonds, we would not expect PBOC prior approval or quotas to be required.
How can investment funds authorised in Hong Kong invest in the CIBM?
Below are our responses to some questions which fund managers have been asking:
Further guidance expected
Given the amount of interest from foreign investors generated by the Announcement, it is anticipated the PBOC will issue further guidance in due course.
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