FSDC Proposes Including Mainland Retirement Funds in Bond Connect Southbound
SingTao · 2 SOURCESabout 3 hours ago2 MIN
Summary
The Financial Services Development Council (FSDC) has released a comprehensive research report titled "Strengthening Hong Kong as an International Asset and Wealth Management Hub: Attracting Patient Capital," proposing to include mainland retirement funds in Bond Connect's Southbound Trading mechanism and advocating for an Insurance Connect framework. The report, published on November 11, outlines three strategic directions for Hong Kong's asset management sector: expanding product varieties, deepening cross-border connectivity, and improving the market ecosystem. FSDC Vice Chairwoman Ding Chen highlighted that while mainland pension funds currently lack access to Stock Connect programmes, there is significant demand for cross-border investments driven by asset allocation needs and yield improvement objectives.
Key Points
- Global insurance and pension assets exceed USD 100 trillion; attracting just 5% to Hong Kong could double the city's assets under management
- Mainland insurance industry held approximately RMB 44.6 trillion in total assets as of Q3 2026, with overseas allocation at only 5.4% against a 15% regulatory cap
- Mainland three-pillar pension system reached RMB 15.66 trillion in 2024 and is projected to grow to RMB 22-28 trillion by 2030
- The National Financial Regulatory Administration has already permitted insurance funds to invest in Hong Kong ETFs through the Shanghai-Shenzhen-Hong Kong Stock Connect
- Asian family offices allocate only about 5% to PE and VC investments, far below the 20% or higher levels seen in Western markets
Why It Matters
The proposals could unlock substantial long-term capital inflows to Hong Kong's financial markets, benefiting banking, insurance, asset management, and professional services sectors . If implemented, the inclusion of retirement funds in Bond Connect Southbound would allow mainland pension managers to access higher-yielding overseas bonds, potentially improving returns for millions of retirees while strengthening Hong Kong's role as a capital gateway between the mainland and international markets .
The proposals could unlock substantial long-term capital inflows to Hong Kong's financial markets, benefiting banking, insurance, asset management, and professional services sectors . If implemented, the inclusion of retirement funds in Bond Connect Southbound would allow mainland pension managers to access higher-yielding overseas bonds, potentially improving returns for millions of retirees while strengthening Hong Kong's role as a capital gateway between the mainland and international markets .