Saxo Bank, the leading fintech and regtech specialist focused on multi-asset trading and investment, has hosted its flagship ‘Gateway to China’ event in Abu Dhabi giving an invited audience of senior investors, analysts and executives key insights into how the country is opening up to global investment.
The event was held over a private lunch on the side-lines of Bloomberg Invest Abu Dhabi which brought together financial leaders, regulators, economists, and innovators to unpack the most significant opportunities and risks facing investors navigating geopolitical turbulence and volatile markets.
Steen Jakobsen, Chief Investment Officer of Saxo Bank, explained to the gathered audience that central banks across the world continue to be challenged by low yields and a global policy panic, and the economic performance of China, responsible for 40 percent of global credit and growth, is critical to the health of the world economy.
He said: “China leads the global credit cycle – where China goes, the world goes. More than ever, the government needs to succeed this year and is taking important steps to open up Chinese assets to global investors to drive significant inflow.
“This year alone will see the inclusion of China’s bonds in global indices like Barclays, Russell, and S&P, and the allocation to China in the MSCI’s emerging markets index will quadruple from 5% to 20%. The overall China-bound inflow over the next three to five years will exceed $1 trillion using very conservative estimates.”
Jakobsen also shared with the audience that the Chinese government is encouraging domestic investors to move away from the housing market and invest more in the equity market, a venue where capital can flow to more productive enterprises. This too may drive foreign investor interest as they will likely be wanting to participate in a more liquid and familiar market.
Saxo Bank has recently moved to help clients gain digital access to Chinese bonds and broaden their access to the country’s A-list shares listed on the Shanghai and Shenzhen stock exchanges.
Saxo Bank has now added Chinese bonds to its global multi-asset offering and is enabling qualified institutional clients to trade mainland China bonds via Saxo Bank’s connectivity with the Hong Kong based Bond Connect mechanism - a mutual bond access programme allowing overseas and Mainland China investors to trade in each other's bond markets.
“This further strengthens Saxo’s position in the region and helps international qualified investors build a stronger diversified portfolio,” said Steve Weller, CEO Saxo Bank, MENA region.
Saxo Bank has just become the first in the market to offer full digital access to mainland China bonds through the Bond Connect gateway via a simple ‘click to trade’ functionality. “With options to invest in, for example, Chinese onshore government bonds and central bank paper, institutional clients get simple, efficient automated access to a market that has historically been complicated and cumbersome for foreign investors to access,” added Jakobsen.
“This means that Saxo’s clients will be able to access a market that is destined to see activity increase drastically as international investors come to understand the importance of the Chinese bond market, and Chinese government bonds in particular. In compliance with People’s Bank of China’s regulations, qualified institutional investors will have access to 127 China bonds with CNH as a settlement currency,” concluded Weller.
