Luxembourg-based fund manager Harvest Global Investments has become one of the first overseas investors to trade on China’s Bond Connect, via its partner HSBC Securities Services.
HSBC will act as custodian and fund administrator for the Harvest China Bonds Fund, after facilitating its set-up to trade the China Interbank Bond market (CIBM).
“We have seen the CIBM rapidly develop and China is determined to open up the capital markets for foreign investors and asset managers. Bond Connect is one of the key milestones among many China access programs including QFII, RQFII and Stock Connect,” said Nicolas Maton, head of securities services, HSBC in Luxembourg.
HSBC has been a partner with Harvest for over eight years in both Asia and Europe, acting as its trustee, global custodian, fund administrator and RQFII custodian to Harvest’s funds in Hong Kong.
The launch of the fund follows the transition of China’s central securities depositories (CSDs) to delivery verses payment (DVP) settlement.
Under the previous arrangement, UCITs fund managers were put off from trading Chinese rates products to the requirement of pre-funding their onshore broker before the bond is delivered.
“We are launching the China Bond Fund to enhance our product offering for international investors. This fund is the first to give investors access to the new Bond Connect and is at the forefront of how the market is developing,” added Ashley Dale, chief business development officer and chief marketing officer, Harvest Global Investments.
HSBC has recently increased its sales capabilities in Luxembourg with the appointment of Riccardo Millich in a newly created sales director role.