Six measures build on interconnection

China's central bank announced six measures to promote interconnection between mainland and Hong Kong financial markets, including expanding the cross-boundary e-CNY pilots so as to facilitate people of both places to shop across the border.

The other measures announced by the People's Bank of China include the introduction of Wealth Connect 2.0 in the Greater Bay Area with mainland retail investors' maximum investment amount raising to 3 million yuan (HK$3.27 million) from 1 million yuan, which could be realized on February 26.

The Securities and Futures Commission said it will issue a circular to Hong Kong's brokerages on requirements and eligibility for joining the Wealth Connect, but they need to find a mainland partner.

Facilitative measures for Hongkongers to remit money to buy properties in the Greater Bay Area will be introduced.

Hong Kong Monetary Authority chief executive Eddie Yue Wai-man said details will be announced soon, adding that the new policy offers banks guidance about the process or requirements related to settlement in yuan or foreign currency.

It will offer a clear, safe and legal way for Hong Kong residents to use their offshore funds to buy homes in the primary or secondary markets in nine cities in the GBA, which is now limited by some remittance quota.

Cross-boundary credit referencing will be introduced to facilitate corporates' financing activities.

Yue said the trial of cross-border credit checking in Shenzhen and Hong Kong will be widened to facilitate the funding of enterprises in both cities.

Yue said PBOC and HKMA will sign a memorandum of understanding within days to set up a cross-border credit checking piloting framework that will provide small and medium-sized enterprises easier access to cross-border funding. It is expected to start in the coming months.

Other measures for institutional investors include recognizing onshore yuan bonds issued by the Ministry of Finance and policy banks as collateral for the Hong Kong Monetary Authority's RMB Liquidity Facility. Currently 50 institutions are eligible for that.

Another one is allowing foreign institutional investors to join the onshore repurchase agreement market. Yue expects these financial measures to be implemented by February 26.

This is the first time onshore bond is being used as collateral in an offshore market, which can lure more international investors to the Chinese bond market and can help consolidate Hong Kong as a center of offshore yuan bond.

Officials including Chief Executive John Lee Ka-chiu and banks said these measures can help strengthen Hong Kong's role as an international finance hub and the offshore yuan business in the city.

themis.qi@singtaonewscorp.com