Financial stocks advance in Hong Kong as Bond Connect opens for business

Financial stocks advanced in Hong Kong on Monday after the new Bond Connect programme opened mainland China’s bond market to global investors.

The banking and brokerage sectors, the direct beneficiaries of the connect programme, rose 0.8 per cent and 0.5 per cent respectively on Monday.

“Bond Connect ensures full accessibility to China’s 67.6 trillion yuan (US$10 trillion) fixed income market,” said Deutsche Bank strategist Jiang Hongtao. “We expect investment inflows via the Bond Connect to be modest initially and reiterate our view of US$700-800 billion bond market inflows over the next five years.”

HSBC and an asset management unit of Bank of China said they have completed their first trades under the scheme. HSBC gained 1.3 per cent to HK$73.6 and Bank of China Hong Kong added 1.5 per cent to close at HK$37.9. Agricultural Bank of China and Bank of Communications rose 1.4 per cent and 0.9 per cent to close at HK$3.7 and HK$5.6 respectively.

Among brokerages, Orient Securities International was the biggest gainer, up 5.6 per cent to HK$1.0, while Huatai Securities added 1.9 per cent HK$15.3.

China property developers also outperformed on Monday after property consultant China Real Estate Information Corporation (CRIC)released data on Friday showing that most developers have reached 50 per cent of their yearly targets in the first half.