Offshore CNH and HKD rates: China’s Social Security Fund offshore bonds buying
China’s plan to acquire offshore bonds.
Group Research - Econs, Samuel Tse10 Sep 2026
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Reportedly, China’s USD568bn (CNY3.8trn) social security fund will be enabled to acquire offshore bonds through Southbound Bond Connect without having to apply for overseas investment quotas from regulators. The investment will be operated via external asset managers. Front-end 1M CNH forward implied yields fell by 8 bps from its recent peak of 1.29% on Monday. 

The bond buying programme is said to be part of the government’s broader initiative to promote RMB internationalization. Foreign institutions are seeing growing demand for RMB funding and treasury management products as RMB usage expands. To facilitate the rising supply and demand for Dim Sum bonds, Mainland and Hong Kong regulators have been taking steps to ensure sufficient liquidity in the offshore RMB market. In fact, the authorities increased the annual Southbound Bond Connect quota from RMB500 billion to RMB800 billion last month. Together with existing initiatives, such as the opening of onshore repo market in Jun 2025, this should keep offshore CNH rates below onshore rates.

The initiative could also be positive for HKD bonds.Regulators announced earlier at the Fixed Income and Currency (FIC) Forum that investors would be able to invest in HKD bonds via Southbound Bond Connect. With onshore investors seeking higher-yielding assets, Hong Kong government and quasi-public sector bonds could provide an attractive alternative to the very low yields available in the onshore market.

Meanwhile, the Hong Kong Government is likely to announce its bond issuance and fiscal plans in the Policy Address and Five-Year Plan next week, on 16 September. The increase in offshore liquidity could help absorb the expected rise in HKD bond supply. The upshot is that long-end HKD bond yields should rise at a moderate pace.



Samuel Tse 謝家曦

Senior Economist- China & Hong Kong 資深經濟學家 - 中國及香港
[email protected]



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