CGN Huasheng Investment Co (CGN Huasheng), a financial service business subsidiary of China General Nuclear Power Corporation (CGN), was recently approved by the People’s Bank of China to register for the Bond Connect program, which gives overseas investors direct access to the Chinese mainland's onshore bond market through Hong Kong.
The move enables CGN Huasheng to be the first offshore financial center under centrally-administrated State-owned enterprises to join the program among the 150 candidates.
The Bond Connect program is an arrangement that enables mainland and overseas investors to trade bonds that are tradable in the mainland and Hong Kong’s bond markets through connection between the Chinese mainland and Hong Kong’s financial infrastructure institutions.
The Bond Connect’s trading is initially “northbound”, allowing qualified overseas investors to invest in the mainland inter-bank bond market through mutual access mechanism between the financial infrastructures institutions in Hong Kong and the Chinese mainland.
This is another key innovative financial link between Hong Kong and the mainland, following the “Shanghai-Hong Kong Connect”, “Shenzhen-Hong Kong Connect” and “mutual bond access mechanism between Hong Kong and the mainland”.
Statistics showed that the aggregate trading volume of Bond Connect reached 7.05 billion yuan ($1.09 billion) during its launching day on July 3.
Domestic bond market primarily consists of the mainland inter-bank bond markets and is more open and transparent than overseas bond markets since it is under the central government’s administration in the aspect of trading, custody and settlement.
Moreover, the launch of Bond Connect provides new allocation channels for offshore renminbi.
After the registration, CGN Huasheng will have the same access to the investment and trading channels as transnational investment banks, fund managers and offshore financial institutions, which will enhance CGN’s financing capacity and influence global reputation and further raise its profile as the country’s largest and world-class nuclear power corporation.
Since CGN Huasheng’s incorporation in Hong Kong in 2010, CGN has accelerated its business expansion on offshore financial services and started entity operation on CGN Huasheng in June of 2015 after the latter provided credit financing, fund management and settlement for CGN branches and subsidiaries at home and abroad through bringing in low-cost funds or exploring more investments and financing channels.
The company also positions itself as CGN’s centralized management and operation center of offshore funds and focuses on serving its own international projects.
Thanks to Hong Kong’s preferential offshore tax policy and its status as an international investment and financing center, offshore renminbi center as well as an international talent hub, CGN Huasheng has built an offshore fund management platform to support CGN’s international businesses and expanded its financial service network globally.
As a major center for fundraising and investment in the Asia-Pacific region, Hong Kong boasts various financing channels. By taking advantage of the city’s unique strengths, CGN Huasheng has improved the efficiency of fund utilization with the help of Hong Kong’s various financial products.
Under the latest version of Hong Kong’s Inland Revenue Ordinance, CGN Huasheng can cut the profit tax of financial business in half.
The company has been quoted as a model case by Hong Kong Monetary Authority and the Invest Hong Kong, the government's investment promotion agency in attracting more mainland enterprises to set up financial service centers in Hong Kong.
CGN Huasheng will actively take advantage of its channels and fully prepare for the growth of CGN’s financial business and help promote the interconnectivity between the financial markets of Hong Kong and the Chinese mainland, according to CGN Huasheng General Manager Lu Gang.