The new offshore contracts for hedging RMB interest rates come shortly after China’s central bank announced new measures to raise the annual investment quotas on Southbound Bond Connect.
Hong Kong begins trading offshore China Government Bond futures
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Hong Kong’s main bourse launched offshore China Government Bond (CGB) futures on Monday in a move aimed at further deepening the internationalisation of the Chinese yuan while expanding the range of RMB-denominated products available to institutional investors based in the SAR.
According to Hong Kong Exchanges and Clearing (HKEX), the new five-year CGB futures are the only CGB futures available in the offshore market, providing investors with a hedging tool for RMB interest rate risks while also promoting closer integration among spot, futures, and derivative markets for treasury bonds.
Speaking at the launch ceremony, Securities and Futures Commission (SFC) chief executive Julia Leung noted that joint market collaboration with the China Securities Regulatory Commission (CSRC) will ease cross-border access and streamline regulatory processes for settling yuan-denominated taxes and transactions, thereby boosting overall market liquidity.
Under the arrangement, investors can trade and clear contracts entirely offshore, using the same account workflows already established for other Hong Kong-listed derivatives, the HKEX explained.
According to the exchange, foreign investors held about 3.2 trillion yuan (US$470 billion) in onshore bonds as of June 2026, up from around 0.8 trillion yuan (US$117 billion) when Bond Connect first launched in 2017, reflecting rising institutional demand for RMB-denominated assets.
Experts see the five-year CGB futures contract paving the way for additional yuan-denominated instruments to become available through the Stock Connect program, including real estate investment trusts (REITs).
CGB futures follow expansion of Southbound Bond Connect
The CGB futures announcement comes just weeks after China’s central bank announced new policy initiatives aimed at increasing the annual investment quota for Southbound Bond Connect.
Back in July, Pan Gongsheng, governor of the People’s Bank of China, confirmed that the Southbound Bond Connect annual investment quota would rise from 500 billion to 800 billion (US$117 billion) yuan during his speech at the Hong Kong FIC & Bond Connect Summit. The decision aims to broaden mainland access to offshore investments, including Hong Kong dollar-denominated bonds and those issued in Macao.
Southbound Bond Connect is a cross-border trading scheme launched in September 2021 that allows mainland Chinese institutional investors to buy bonds in Hong Kong and, through Hong Kong’s platform, access global bond markets. It complements Northbound Bond Connect for overseas investors into China.
[See more: Southbound Bond Connect quota increased to boost GBA ties]
The policy shifts come as Hong Kong is also positioning itself as a gold trading hub. The city is building on last year’s launch of the Shanghai Gold Exchange’s first offshore vault and yuan-denominated gold contracts offered in the SAR in what analysts like Christopher Wood at Jefferies describe as the gold version of Hong Kong’s Stock and Bond Connects.
According to a recent Colliers report, industrial and warehouse rents continue to slide despite a pickup in AI-driven exports feeding a 5.1 percent first-half GDP growth in Hong Kong. The city’s plans to expand gold storage capacity should be viewed as a sector catalyst, with Wood noting that the city aims to hold more than 2,000 tonnes of gold in three years, up from a current total of about 200.
