Hong Kong to launch CGB futures to bolster RMB asset appeal

Hong Kong is set to launch futures contracts based on renminbi treasury bonds on Aug 3, enriching offshore hedging tools for managing exposure to RMB assets and marking a milestone in the city's efforts to support yuan internationalization.

The product, announced by Hong Kong's Securities and Futures Commission on Thursday, will use five-year China Government Bonds as the underlying assets and be traded on the Hong Kong Exchanges and Clearing Ltd.

The move comes as overseas investors continue to increase holdings of CGBs, with foreign holdings reaching about 2 trillion yuan ($295 billion) by the end of May, according to the commission.

The People's Bank of China and the China Securities Regulatory Commission said in a joint statement that they support the launch, noting that it will further enrich risk management tools for international investors, enhance the appeal of RMB assets, and strengthen Hong Kong's position as an offshore yuan hub.