Research On The Development Of Hong Kong’s Offshore RMB Bond Market

China has began to carry out cross-border trade RMB settlement pilot work since2009July, which made the process of internationalization of RMB a solid step. Since then, with the RMB as the settlement means and international reserves means continuously has accepted and used by foreign countries. When the offshore RMB stock has reached a certain scale, there will be an investment demand. Therefore, it is necessary to establish a fairly large pools of capital to maintain the stability of the currency situation, which provide enough RMB denominated investment products, through the normal investment channels for overseas RMB return to China mainland market.Establishment of offshore RMB bond market in Hong Kong is a suitable location, this is the consensus academia. About Hong Kong’s RMB bond market research, most scholars believe that the internationalization of RMB. RMB bond market in Hong Kong cannot be separated, and to explore the establishment of offshore RMB bond market in Hong Kong in accordance with the development direction of foreign experience, the path, there is a risk, and many businesses prefer to go to Hong Kong to issue bonds reasons. Combing through the existing literature and analysis, we found that the current research on the offshore RMB bond market also has the following disadvantages:First, the mere establishment of discourse from the perspective of the mainland market for Hong Kong’s offshore RMB.RMB internationalization major meaning, little mention of the impact of the establishment of this market bond market in Hong Kong and the whole capital market in Hong Kong. Second, offshore RMB bonds in the final analysis is a financial product, this study is relatively small introduction of product attributes, and comparative analysis with other foreign bonds even less. Third, the issue of Hong Kong’s offshore RMB bond interest rates low, which has become the consensus of the market, but most studies only focused on the qualitative analysis of low financing rates, and this lack of a quantitative analysis of factorsBased on this, the internationalization of the RMB in the background, in economics, finance knowledge base, to build a theoretical framework. By introducing basic bond market in Hong Kong to discuss the current status of the development of the offshore RMB bond market in Hong Kong, further analysis of the factors affecting the offshore RMB bond issuance rates, starting from the influencing factors, Hong Kong’s RMB bond market to find the current problems and to the policy recommendations.Firstly, offshore financial markets and offshore bond markets. Describes the definition of offshore financial markets and outlines four types of offshore financial markets, and tap their common characteristics. A brief definition of offshore bonds, offshore bond market characteristics. Bond issue cited theories about interest rates, and lay the foundation for the study of the offshore RMB bond issuance rates.Secondly, to explore current development of offshore RMB bond market. This paper is to analyze in terms of market participants, market and trading mechanisms, such as the operating characteristics of the status of the current bond market in Hong Kong, the Hong Kong bond market is currently drawn inadequate for three reasons:lack of supply of the product, lack of investor demand, localization of ratings institutions and rating system development has stagnated. The necessity of the establishment of the offshore RMB bond market in Hong Kong by the lack of bond market leads. Then the offshore RMB bonds and other bonds were analyzed, depending on the settlement currency, the offshore RMB bonds are divided into general synthesis Sum Dim Sum bonds and debt, and explains its characteristics. Then summarize the current status of each issue and the issue of the size of the main issue of offshore RMB i bonds. Finally, analysis of the impact on Hong Kong’s offshore RMB internationalization of the RMB bond market and its impact on the Mainland, Hong Kong’s financial markets.Thirdly, the analysis of factors affecting the offshore RMB bond issuance rates. Bond issuance theory factors affecting interest rates, combined with Hong Kong’s offshore RMB bond market bond issuance present factor analysis, each of the above factors will come under different circumstances affect the interest rate on bonds issued by the conclusion, after using measurement methods based on Empirical validation. This paper selects the level of bond yields mainland and offshore RMB against the U.S. dollar (NDF), BOC (HK) Offshore RMB Bond Index, the time period of the bond, the issuer main characteristics as explanatory variables, the offshore RMB bond issue rate table as being explanatory variables, multiple linear regression model for quantitative analysis. First discovered by regression:In the medium and longer term (more than about1year) issue of interest rates affect the secondary market bond index for offshore RMB bonds is not significant, did not pass the test. The rest can be significant explanatory variables through the interest rate on the bond issue affects both the time period relative to the exchange rate, the main feature is not too much influence However, the first results of the regression coefficient of determination is not high, the explanatory power of the model is not strong. Therefore, in the second regression process, the paper removed the bond period of time this factor, re-select the previous92%of the data (select only issued for a period of two years, three years, five years, bonds, totaling134), carried out regression analysis showed that the resulting increase in the explanatory power of the equation, but still high. This also explained to some extent, within the time span of nearly three years, the interest rate of RMB bonds issued in Hong Kong factors in addition to the explanatory variables beyond, there may be other factors that affect interest rates affect bond issue. Then, for the second time this paper has been amended return. The study found that BOC (HK) Offshore RMB Bond Index obvious existence of two breakpoints, for these134bonds can be chronologically divided into three sub-sample regression analysis. Thus found that in addition to the exchange rate, the main features of the bond issue interest rates significantly, but in a short time span (about six months), when the two market trends show a more gentle rise in the state, the bond index significantly affect the issue of interest rates. On the contrary in the secondary market fell or rose rapidly in the time interval, the impact of interest rates on the issue of the bond index not significant, but the main issue features affect the exchange rate factor is always the issue of interest rates in the bond.Finally, the empirical results demonstrate some of the factors that influence the interest rate bond issue, the process of performing the above analysis found some problems in Hong Kong’s offshore RMB bond market currently exists Generally, there are:a lack of reasonable pricing standards, secondary market liquidity remains ample, the RMB appreciation is expected to result in the offshore RMB bond market volatility, the rating system is imperfect, the mainland government approval limit market development. With related issues, the text draws some policy implications, namely:improving back mechanism offshore RMB cross-border RMB trade settlement expand and broaden investment channels, increase policy support to create a line with the national regulatory model offshore market, improve credit rating continue to promote the operation of the system construction market.