LONDON, Oct 11 (IFR) - Foreign buyers of onshore Chinese
government bonds are likely to jump five-fold to 10% of the
market within two years, giving a US$100bn investment boost into
the country, HSBC chief executive Stuart Gulliver said.
Overseas investors have increased their holdings of onshore
government bonds by US$15bn since March, and the head of
Europe's biggest bank expects that pick-up to accelerate.
"We expect the proportion of the onshore government bond
market owned by foreigners to increase from around 2% today to
10% in the next two years, boosting inflows by as much as
US$100bn," Gulliver said on Tuesday in London at an HSBC event
He said "progressive, controlled reform" was accelerating
the speed of capital flows in and out of China. That should
"pave the way for looser restrictions on ownership of overseas
assets by Chinese residents", after Chinese companies have spent
US$170bn on overseas M&A already this year, compared with
US$100bn in all of 2015, Gulliver said.
"The size of China's economy and the shift towards
consumption and services are changing the nature of those
acquisitions, from basic resources to services, technology and
luxuries that meet the demands of increasingly affluent
consumers," he said.
Gulliver said those shifts are part of China's maturing
financial markets, including internal investment and reforms,
and also in its trade relationships and the internationalisation
of its currency.
HSBC, which is based in Britain but makes most of its
profits in Asia, is trying to tap into demand for banking
services within the country and as Chinese firms look outward.
The bank is still waiting for regulatory approval for a
securities joint venture it announced last year, however.
Approval had been expected to be granted before the end of
As a result, the venture is unlikely to launch this year,
said Helen Wong, HSBC's chief executive for Greater China.
Wong said it will be in operation within six months of
approval being given, and the bank has already been hiring staff
and working on how it will work alongside HSBC's operations.
HSBC will own 51% of the joint venture with Shenzhen Qianhai
Financial Holdings, becoming the first foreign bank to get
majority control of a securities venture, after years where
overseas partners were limited to holding minority stakes.
Gulliver has previously said he wants to use the venture to
establish a foothold for the full range of investment banking
products, particularly issuing bonds within China.
(Reporting by Steve Slater)