Hongkong Renminbi Bond Market Development And Yield Model

Along with the acceleration of Renminbi internationalization,Renminbi has been more and more widely accepted as an invoicingcurrency and reserve currency. The total offshore Renminbi amount hasbeen increasing rapidly, and created strong demand for Renminbiinvestment. Hong Kong offshore Renminbi bond market is extremelyimportant to supply the demand because of its leading role in optimizingRenminbi pricing system, providing Renminbi investment product andestablishing rational Renminbi backflow mechanism, which also provideskey support to the Renminbi internationalization.Firstly, this article presents the history of Hong Kong offshoreRenminbi market development, and it analyzes the market’s character andcurrent status. Secondly, this article focuses on the bond yield of HongKong offshore Renminbi. It introduces the financial theories that could beapplied to bond yield analysis, including Interest Rate Parity Theory andBond Pricing Model. Thirdly, the article analyzes the factors that impactthe Hong Kong offshore bond yield using the tools like regression and test.The empirical study discloses that the anticipation of rising Yuan impactsthe yield significantly, so does the total Hong Kong Renminbi depositamount and Offshore RMB Central Government Bond Yield. And theexpectation of Renminbi appreciation leads the bond yield with abelievable confidence level. Finally, the article tries to look ahead to the future vision of Hong Kong offshore Renminbi bond market.Through the research, this article is to provide a reference tounderstanding the Hong Kong offshore Renminbi bond market and itspractice.