HKEX Launches Five-Year China Government Bond Futures, First Day Trades at 107.695
On August 3, HKEX launched the first offshore five-year Chinese government bond futures, with September and December contracts closing at 107.695 and 107.685 respectively. Eleven institutions served as liquidity providers. Banks including BOC Hong Kong, HSBC, Standard Chartered, and ICBC Asia participated actively. A survey found 87% of institutional investors have entered the RMB market, with 63% using offshore RMB and 54% using connect schemes.
On August 3, the Hong Kong Exchanges and Clearing Limited (HKEX) officially listed five-year Chinese government bond (CGB) futures contracts. By the close of trading, the September-dated contract last traded at 107.695 yuan, while the December contract settled at 107.685 yuan. The product is the first offshore CGB futures contract launched by HKEX, with 11 institutions serving as liquidity providers. Chinese banks and foreign institutions participated actively in first-day trading. Bank of China (Hong Kong), a designated liquidity provider, completed multiple trades spanning all contract months on the first day, providing two-way quotes to investors. HSBC assisted clients in completing the first batch of five-year CGB futures trades on the launch day, with participating clients including Bank of Communications (Hong Kong), Malayan Banking Berhad, and China CITIC Bank International. Standard Chartered Bank, a designated primary liquidity provider, participated in market-making and two-way quoting after the product listing and completed first-day trades for several foreign institutional clients. ICBC (Asia), another designated liquidity provider, participated in two-way quoting through broker UBS in the two days before the listing. UBS provided market access and clearing infrastructure; according to its estimates, multiple liquidity-provider clients trading through UBS contributed approximately 18% of market turnover on the first day and about 17% on the second. China Asset Management (Hong Kong) executed the first contract trade at the market open, with China Futures International as counterparty, and simultaneously implemented short-hedging operations for its global investment-grade bond fund and selected Asian bond fund. Zhang Chengdong, head of global markets trading at BOC Hong Kong, said that since the launch of the northbound Bond Connect in 2017, foreign institutions' holdings of onshore interbank bonds have grown more than fourfold, reaching 3.2 trillion RMB by June 2026. The average monthly clearing volume of Swap Connect has continued to rise, and market infrastructure is improving. The five-year CGB futures, as a standardized exchange-traded duration risk management tool, complement the over-the-counter Swap Connect and help offshore investors manage interest rate risk on medium-term RMB bonds. A survey commissioned by HSBC and conducted by a third party showed that nearly one-third of institutional investors regard Chinese government bonds as the most promising RMB asset class. Eighty-seven percent of institutions have already entered the RMB market through various channels, with the most commonly chosen access being the offshore RMB market at 63%, followed by connect schemes such as Bond Connect and Stock Connect at 54%.