China and Hong Kong launched a long-awaited ‘Bond Connect’ programme on Monday that links China’s $9 trillion bond market with overseas investors, the latest step in Beijing’s efforts to liberalise and strengthen the country’s capital markets.

The launch of the connection was timed to coincide with the 20th anniversary of Hong Kong’s handover to Chinese rule and trading will initially commence “Northbound”, meaning foreign investors will be able to buy and sell Chinese bonds.

“Hong Kong Bond Connect is a major new breakthrough in the development of China’s bond market. I expect it to become the most significant channel facilitating new international access and participation in China’s inter-bank bond market and will enhance its price discovery and liquidity.

“Bond Connect represents another major step in our mutual market access programme, that began with Shanghai-Hong Kong Stock Connect in 2014 and the Shenzhen-Hong Kong Stock Connect last year. It furthers strengthens Hong Kong’s position as an international financial center.” Hong Kong stock exchange chairman, Chow Chung Kong said.

The connection will increase the supply of yuan-denominated assets that can be held by global investors as Beijing steps up the internationalism of its currency. Media reports said 20 market makers for the bond connect scheme had been approved, including 14 Chinese and six overseas institutions.