Macao and Hong Kong officially connected their bond clearance and settlement systems on Tuesday, according to a joint statement issued by the Monetary Authority of Macao (known by its Portuguese initials AMCM) and the Hong Kong Monetary Authority (HKMA).
The move – first announced last September – has created a cross-border investment and financing channel that enables investors from each SAR to clear, settle and hold bonds lodged in either system.
“The direct linkage aims to promote the development of the bond markets in the two regions,” it read, and “also signifies a new milestone in financial cooperation between Hong Kong and Macao,” while “demonstrating the synergistic development of the Guangdong-Hong Kong-Macao Greater Bay Area.”
[See more: Macao’s bond market sees record listings in 2024]
The first day of trading was “very smooth,” said AMCM chairman Benjamin Chan in remarks cited by the South China Morning Post. He said that Tuesday saw four new bond issuances in Macao, worth 3.2 billion patacas (US$401 million), settled via Hong Kong’s Central Moneymarkets Unit (CMU). There were also 18 secondary-market transactions by Macao and Hong Kong investors.
The new linkage has meanwhile established Macao’s first central securities depository (CSD) outside of its territory. Chan said that this opened doors for international investors, including those from Portuguese-speaking countries, to more conveniently participate in Macao’s bond market – strengthening its function as a financial services platform between China and the lusophone nations.
“The AMCM will continue to establish connectivity with the bond markets in mainland and international markets, to gradually expand new financial services and to support the development of appropriate economic diversification for Macao,” Chan said.
[See more: Beijing issues 5 billion yuan’s worth of treasury bonds in Macao]
The HKMA’s chief executive, Eddie Yue, said the linking of the bond markets highlighted “Hong Kong’s role as a super connector and represents a major step towards developing the CMU into an international CSD in Asia.”
Macao’s government has focussed on growing its bond market in recent years, with finance being one of the four emerging industries considered key to the SAR’s economic diversification. Last year saw Macao’s Chongwa Financial Asset Exchange (known as MOX) issue US$28.1 billion worth of bonds – a new record and a massive increase since it opened in 2018, when listings totalled slightly over US$600 million.
Hong Kong’s bond market remains far larger, however, with US$435 billion of outstanding bonds in 2024.
