Effective risk management is increasingly important for participants in China's capital markets, especially with the rising participation of foreign investors. The current volatile market environment presents a challenging backdrop for investors of RMB assets, with broadly synchronised monetary tightening across advanced and emerging economies, a slower-than-expected economic recovery in China, relative currency weakness, and negative yield spread with US rates. Notwithstanding the above, enhancements to connectivity between Mainland and international markets continued, particularly in the area of risk management. For example, the Hong Kong Exchanges and Clearing Limited (HKEX) launched the MSCI China A 50 Connect Index Futures in October 2021, which provides investors with a new and effective risk management tool to manage their A-share exposures. In May 2023, Swap Connect was launched, expanding mutual market access between Hong Kong and the Mainland into the derivatives space, allowing RMB bond investors to conveniently access the more liquid onshore interest rate swap market to manage related interest rate risks, rather than relying on offshore non-deliverable interest rate swaps. These initiatives have been welcomed by the market and are conducive to  1/3  BIS - Central bankers' speeches  closer connectivity between the onshore markets and international investors, and ultimately benefit the high-quality development of onshore financial markets. Moving on to another key focus for the next stage of China's opening up: its green finance market. To achieve its dual-carbon strategies, it's estimated that over RMB100 trillion will need to be directed towards carbon reduction, which presents significant climate finance opportunities for foreign investors.
In closing, given the limited amount of time today, I could only briefly touch on two key themes in the broader opening up of China's capital markets. At the HKMA, we are continuously working with Mainland authorities and the industry towards new policy breakthroughs to better serve global investors and support the development of onshore markets. I warmly welcome your views and ideas on ways to further strengthen the connectivity between China's and Hong Kong's financial markets. Thank you, and I wish today's conference a great success. 3/3  BIS - Central bankers' speeches