---
title: "Insurance funds \"head south\": Bond Connect \"southbound\" officially opens, with PICC Life Insurance and five others taking the lead to test the waters"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/290956531.md"
description: "In June, the Bond Connect \"Southbound Bond Connect\" was officially launched, and six leading insurance companies, including China Life and PICC Life Insurance, were approved to carry out cross-border bond investments. Several insurance asset management institutions, such as Ping An Asset Management and China Life Asset Management, have completed their first transactions, focusing on offshore RMB bonds. This move marks the opening of a new channel for global asset allocation of insurance funds, achieving a key breakthrough for the Chinese insurance industry"
datetime: "2026-06-26T11:15:41.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/290956531.md)
  - [en](https://longbridge.com/en/news/290956531.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/290956531.md)
---

# Insurance funds "head south": Bond Connect "southbound" officially opens, with PICC Life Insurance and five others taking the lead to test the waters

In June, insurance funds participated in the Bond Connect "Southbound" as the policy transitioned from conception to practical implementation. China Life, PICC Group, Ping An Insurance, China Pacific Insurance, China Taiping, and Taikang Insurance have all obtained entry tickets, becoming the first batch of six insurance companies approved to engage in "Southbound" bond investments.

At the same time, several insurance asset management institutions, including China Life Asset Management, Ping An Asset Management, and Taikang Asset Management, announced the completion of their first "Southbound" investment transactions as the first batch of trustees. This marks the official opening of a new channel for cross-border bond investment by insurance funds, representing a significant breakthrough in the global asset allocation of China's insurance industry.

**Six major leading insurance companies take the lead** **in entering the market**, **with the first transactions landing intensively**

The Southbound initiative for insurance institutions adopts a cautious approach of "pilot first, steady expansion." The six selected life insurance companies are all leading institutions in the industry. So far, as the first batch of trustees to carry out "Southbound" business, six insurance asset management institutions, including Ping An Asset Management, China Life Asset Management, Taikang Asset Management, and PICC Asset Management, have completed their first "Southbound" investment transactions.

Each institution is advancing its first layout in an orderly manner based on its own research and strategic positioning. Taikang Asset Management, as one of the first trustees to carry out Southbound business, successfully completed its first investment with funds from Taikang Life, focusing on the offshore RMB bond market and prioritizing high-quality varieties represented by "dim sum bonds." To ensure smooth business implementation, Taikang Asset Management has specifically established a special task force for "Southbound" business preparation, systematically advancing institutional construction, research preparation, credit management, system integration, and other preparatory work.

China Life Asset Management actively responds to policy calls, strictly adhering to regulatory requirements, playing the role of an industry "leading goose," and cautiously and steadily conducting investments. Recently, it successfully completed its first transaction, marking a new solid step in the global fixed income investment layout. Ping An Asset Management, entrusted with funds from Ping An Life, successfully completed its first "Southbound" bond investment transaction.

It is noteworthy that recently, after close communication and thorough verification, **PICC Group's subsidiary** **PICC Life Insurance successfully completed its first transaction in the "Southbound" investment business, marking that PICC Life Insurance has officially relied on the interconnection channels to layout the Hong Kong offshore bond market, achieving a new breakthrough in cross-border fixed income allocation for insurance funds.**

PICC Life Insurance stated that it will actively respond to policy calls and cautiously and steadily advance the construction of investment mechanisms, risk compliance management, research and preparation for custody, and other work. From the clarification of the policy to the landing of the first transaction, PICC Life Insurance ensured a smooth start for the business through solid preparatory work. PICC Life Insurance indicated that it will unwaveringly implement the major decision-making deployments of the Party Central Committee, strictly adhere to various regulatory guidance requirements, continuously leverage policy dividends, maintain a risk bottom line, cautiously broaden the path for overseas diversified asset allocation, and fully utilize the long-term funding advantages of life insurance to serve the national strategy of high-level opening up.

**Deepening interconnection mechanisms, Southbound opens up new paths for insurance funds to go abroad**

The Bond Connect "Southbound" refers to the interconnection and cooperation between the mainland and Hong Kong bond markets, established as a standardized cross-border investment mechanism jointly built by the central bank and the Hong Kong Monetary Authority. In simple terms, it is an exclusive channel for qualified domestic institutions to directly invest in the Hong Kong bond market's circulating bonds through direct connections to the financial infrastructure of both places This mechanism officially went live on September 24, 2021, forming a two-way communication pattern with the "Northbound Trading" for investing in the mainland bond market, with banks as the main participants in the initial phase.

In July 2025, the People's Bank of China announced plans to improve the "Southbound Trading" operational mechanism, expanding the scope of domestic investors to include four types of non-bank institutions: securities firms, funds, insurance, and wealth management. This marks the first time non-bank financial institutions have been included in the qualified investor scope of "Southbound Trading."

After nearly a year of institutional preparation and system integration, this policy will be substantively implemented in June 2026. The National Financial Regulatory Administration confirmed that it has agreed to allow some leading insurance companies to conduct qualified overseas bond investments through the "Southbound Trading" mechanism. The relevant guidelines for insurance funds participating in "Southbound Trading" have also been clarified, covering asset classification, investment methods, transaction mechanisms, and more.

Compared to traditional Qualified Domestic Institutional Investor (QDII) fund investment channels, "Southbound Trading" has significant advantages in quota and operational convenience. "Southbound Trading" establishes an independent quota management system, with an initial annual total quota of 500 billion yuan equivalent, a daily quota of 20 billion yuan, and this quota does not count towards the current overseas investment proportion limit for insurance funds.

This arrangement directly breaks through the long-standing industry bottleneck of QDII quota scarcity—according to the approval situation report released by the State Administration of Foreign Exchange (as of the end of May 2026), the cumulative approved quota for all categories is 176.169 billion USD, covering 193 institutions, of which insurance accounts for 40.643 billion USD, approximately 23.07%. Due to quota restrictions, the proportion of overseas investments by insurance funds has long been low, below the regulatory investment upper limit of 15%. The establishment of an independent quota system for Southbound Trading opens a new channel for insurance funds to broaden their overseas allocation space.

In terms of investable targets, "Southbound Trading" allows investment in all types of bonds traded in the Hong Kong market, with pricing currencies covering offshore RMB, USD, HKD, etc., offering a rich variety and diverse choices. From the initial trading trends, insurance funds generally prioritize "dim sum bonds"—that is, offshore RMB-denominated bonds. This type is settled in RMB, eliminating foreign exchange mismatch risks, and the market supply continues to expand, reaching a stock size of 18.7 trillion yuan by the end of 2025, with an annual issuance volume growing by over 50% year-on-year, fully matching the core allocation needs of insurance funds for long duration and stable coupon income.

At the same time, regulators have clearly required insurance institutions to establish a separate cross-border risk control system for overseas bond investments through Southbound Trading, prudently managing exchange rate risks, overseas credit risks, and cross-border liquidity risks, ensuring that business development is matched with risk control capabilities.

**Alleviating industry allocation pressure and empowering financial collaboration between the two regions**

From the announcement of policy expansion in July 2025 to the completion of the first transaction by six leading insurance companies in June 2026, the participation of insurance funds in "Southbound Trading" has transitioned from policy blueprint to practical implementation. The early entry of six life insurance companies, including China Life Insurance, marks the formal entry of insurance funds into the normalized operation phase of global bond allocation China Taiping stated that the "Southbound Trading" business not only broadens the group's investment channels in the Hong Kong bond market but also optimizes the structure of insurance asset allocation, improving yield levels and risk resistance capabilities. Ping An Asset Management also pointed out that the expansion of the qualified investor scope for this "Southbound Trading" to include non-bank institutions will facilitate efficient investment of mainland insurance funds in the Hong Kong bond market, enhancing the vitality and competitiveness of the Hong Kong bond market, consolidating Hong Kong's position as a bridge and hub connecting the mainland with global markets, and deepening the high-level bilateral opening of China's bond market.

Soochow Securities non-bank analysts believe that insurance funds investing in dim sum bonds through the "Southbound Trading" channel will help broaden allocation channels and alleviate the interest rate spread pressure under the domestic low-interest-rate environment to some extent. For non-bank institutions, participating in "Southbound Trading" can better meet diversified investment needs, optimize asset allocation, and diversify single market risks; for the Hong Kong bond market, it will help attract more diversified investors, enhancing market activity and liquidity.

In the current macro environment, the utilization of insurance funds faces significant yield matching and duration matching demands. The "Southbound Trading" precisely provides a practical path for insurance funds to increase allocation to long-term assets. It not only opens a new channel for insurance funds to allocate overseas long-term, high-yield bonds but also pushes the Chinese insurance industry to take a solid step forward in the journey of global asset allocation. With the continuous improvement of the institutional environment and the orderly expansion of participants, the normalization of insurance funds "going south" for allocation is steadily unfolding.

Keyword reading: Southbound Trading, Bond Connect, Insurance Funds

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