Taking off

Despite still being at an early stage, the local bond market is taking shape and an improved legal infrastructure could serve as a strong booster. 


“The success for Hong Kong [’s bond market] is due to its legal system,” Hong Kong-based lawyer David Cheng 

It’s been more than two years since the central government and local authorities hinted the possibilities of establishing a yuan-denominated equity exchange in Macau, but there has still been a lack of detail about how the city could transform into a tour de force in the region’s financial industry — and even on the global stage — and diversify its gaming-oriented economy.

Nonetheless, there is a growing vibrant scene in the local financial industry that has strived to expand from its traditional banking-reliant business model in recent times. One of these up-and-coming financial segments is the bond market, after Chongwa (Macao) Financial Asset Exchange Co., Ltd (MOX) — the SAR’s first financial institution to provide services of bond issuance, listing, registration, custody, trading and settlement — was established in December 2018.

In view of the potentials of the local bond market, the Macau Financial Law Association (MFLA) has recently held an online seminar about bond issuances and listings in Mainland China, Hong Kong and Macau, in which experts and lawyers from the three sides shared their insights on the topic. 

“One of the avenues for the economic diversification of Macau is the development of the financial industry,” said Chan Wa Keong, chairperson of the Board of Directors of MFLA, at the “Process of Bond Issue and Listing — Mainland, Macau and Hong Kong” webinar held on 11 August. “We, the legal practitioners, have to find ways to make contributions to the local economic diversification and the development of the financial industry,” the legislator-cum-lawyer explained the importance of the webinar, which attracted over 150 participants.

Liu Fei, Head of Departments of Trading and Research of MOX, which was established by Chinese state-owned conglomerate Nam Kwong Group, was one of the guest speakers of the webinar, who revealed the size of bonds issued and/or listed in Macau has totalled MOP180 billion (US$22.46 billion), as of end of July 2021, since the inception of MOX less than three years ago. This means the size of the local market would likely double itself in less than a year — because MOX revealed in November 2020 the volume of bonds issued and listed here hit the benchmark of MOP100 billion. 

Albeit the development in recent times, Mr Liu told the webinar, the local market was still “a newbie market”, which has only gained traction in the wake of the debut issuance of government bonds valued RMB2 billion (US$308.7 million) by the Chinese Ministry of Finance in the gambling enclave in 2019. The Macau authorities remarked at the time the issuance “marks a milestone” in the development of the local bond market and the financial sector.


“What we could offer now is that when the issuer opts for listing its bonds at MOX it could also choose to list the bonds at the Luxembourg Stock Exchange through the cooperation mechanism,” said Liu Fei from MOX. “We underscore the openness and internationalisation of the local [bond] market.”

Streamlined procedures

China Development Bank, one of the three Chinese policy banks that is in charge of raising funds for large-scale infrastructure projects, has also listed bonds twice in the city in 2020 and 2021 respectively in a total volume of over US$4 billion. These have helped the lender become “the largest bond issuer” at MOX, which was “a major recognition” for MOX as the financial trading platform for Macau, and has facilitated the development of the local bond market, MOX said at the time. 

Three of the six Macau gaming operators — namely, SJM Holdings Ltd, MGM China Holdings and Melco Resorts & Entertainment Ltd — have also listed their senior notes at MOX respectively this year. “At the start of China’s 14th Five-Year Plan, Macau is well prepared to develop a modern financial industry under the undivided support from the central government,” MGM China said in a statement at the time, referring to the series of social and economic development initiatives pledged by Beijing for the 2021-2025 period. “As a core member of the city’s tourism and leisure enterprises, we are pledged to support the government’s direction and contribute to the success of Macau’s financial industry.”

At the MFLA webinar, Mr Liu explained the bonds listed and/or issued in Macau could be either targeted at professional investors only or the general public, with stricter requirements for the latter. The official at the platform also pointed out it’s “more commonplace” to see companies or institutions have their bonds issued in other markets — like Hong Kong, Singapore and Mainland China — and listed at MOX than have their bonds listed and issued in the territory, such as the cases of gaming operators and China Development Bank.

He noted the procedures for bond issuances and listings at MOX could be divided into three phases: preliminary phase that includes coming up with an issuance or listing proposal; application phase that includes the assessment by MOX and the approval from the local authorities; and listing/issuance phase. 

“Compared with the past, the time required for all the application and approval steps has been significantly shortened in recent times,” he revealed. For instance, the time for the application and evaluation of bonds to be issued and listed in Macau now takes about a month, while the required time for bonds issued elsewhere to be listed in the territory — which entail simpler procedures — is even shorter, at about 5-10 working days.

MOP180 billion

– Amount of bonds listed and issued in Macau as of July 2021

Legal infrastructure

In spite of the signs of development, the local bond market is still insignificant on the regional and global scales. According to the United States-based Securities Industry and Financial Markets Association (SIFMA), the latest size of the bond market is estimated to be at US$119 trillion (MOP952 trillion) worldwide. Mainland China, the world’s second largest bond market after the US, issued RMB4.55 trillion (US$703 billion) in new local government bonds just in 2020, excluding corporate bonds and others, figures from the Chinese Ministry of Finance showed. 

The adjoining jurisdiction, Hong Kong, was also the second most popular destination for international bond listings from Asia in 2020, only trailing behind Singapore but well ahead of Luxembourg and the United Kingdom in Europe, said David Cheng, another guest speaker of the August webinar, citing market data. 

Singapore was predominantly the favourite destination for bond listings from Asia before 2011, the year Hong Kong has simplified its rules for bond issuances and listings for professional investors, the partner of the Hong Kong office of the international law firm Winston & Strawn LLP highlighted. Following the revision, the nearby SAR has begun to attract more institutions and companies to issue and list bonds due to the “higher efficiency”, he added.

“The success for Hong Kong is due to its legal system,” Mr Cheng talked about how Hong Kong has become a major player in the global bond market and the Asian financial centre. “As Hong Kong was a former British colony… investors who are familiar with the common law in the UK and the US are willing to invest in Hong Kong.” He added that Macau also has potential to develop the bond market, given the success in Hong Kong after its handover in 1997. 

Currently, the bond issuances and listings in Macau are subject to the governance of the Macau Financial System Act, dated in 1993, and the two guidelines compiled by the Monetary Authority of Macau (AMCM) on the issuance, trade management, underwriting and custody of bonds. 

In light of the development of the financial market in recent times, the Macau authorities have planned to update the Financial System Act and formulate different sets of specific financial rules. Secretary for Economy and Finance Lei Wai Nong said last year the government was studying to put forward the Fund Law, Bond Law and Trust Law respectively to offer more convenience and improve efficiency for the financial industry, but there has yet to be any timeline for the completion of these new legislations. 

Another speaker at the MFLA webinar — Tian Mingzi, partner at mainland Chinese law firm Jingtian & Gongcheng (Beijing and Shanghai) — noted the Securities Law in the mainland came into force in 1999 and has been updated several times to catch up with the changes in the market, including the latest revision in 2019.

But both the Shanghai Stock Exchange and Shenzhen Stock Exchange, the two major national bourses in the mainland, were established in 1990, nine years before the inaugural Securities Law. Talking about this legal blank space in the past, Ms Tian noted the bond issuances and listings in the mainland in the early 1990s were majorly led by the central government and local authorities. “The legal framework was indeed not complete at the time and the trade [of bonds] were mostly government-led,” she noted, adding the bond scene in the mainland has only become vibrant with different types of bond products following the implementation of the Securities Law. 


“We, the legal practitioners, have to find ways to make contributions to the local economic diversifications and the development of the financial industry,” Chan Wa Keong, chairperson of the Board of Directors of MFLA

Cooperation with Luxembourg

Awaiting the amendments to the local rules, MOX has continued looking for other avenues to develop the local bond market. The Macau platform inked a memorandum of understanding with Luxembourg Stock Exchange (LuxSE) last year, which entailed dual bond listings and other cooperation areas in a bid to facilitate cross-border investments and the liquidity in the offshore yuan bond markets.

“What we could offer now is that when the issuer opts for listing its bonds at MOX it could also choose to list the bonds at the Luxembourg Stock Exchange through the cooperation mechanism,” Mr Liu explained in the MFLA webinar. “We underscore the openness and internationalisation of the local [bond] market.”

On 19 August this year Sichuan Development Holding Co Ltd successfully listed its US$400 million notes at both MOX and LuxSE, the first Macau-Luxembourg dual bond listing. The local platform noted in a statement this was a great example of how “state-owned firms could utilise the advantages of Macau in the areas of political, economic and international affairs”. Standard Chartered Bank, one of the joint global coordinators and book runners for this dual listing, also remarked in a statement it was looking forward to more listings at MOX by Chinese firms to “strengthen the financial development of the Guangdong-Hong Kong-Macau Greater Bay Area”.  

A moderator for the August webinar, Calvin Chui, who is also the president of the Executive Committee of MFLA and partner at local law firm Rato, Ling, Lei & Cortés Lawyers, called the event a success, adding the association would organise more similar seminars in the future to help expedite the development of the Macau bond market.