Logo of Phnom Penh Post newspaper Phnom Penh Post - China bonds prove irresistible to int’l funds in 2021

China bonds prove irresistible to int’l funds in 2021

Content image - Phnom Penh Post
A cashier at a bank in Taiyuan of China’s Shanxi province counts yuan notes. CHINA NEWS SERVICE

China bonds prove irresistible to int’l funds in 2021

A stable yuan exchange rate and higher yields have been attracting overseas institutions to Chinese bonds, pushing offshore holdings to new highs, according to the central bank.

The Shanghai head office of the People’s Bank of China (PBoC) on January 10 said overseas institutions held four trillion yuan ($628 billion) of China’s interbank bonds by the end of December, up 23 per cent year-on-year.

Chinese government bond (CGB) holdings by offshore investors reached a record 2.45 trillion yuan at the end of December, up nearly 31 per cent year-on-year. Holdings of quasi-sovereign bonds issued by China’s policy banks also jumped 18 per cent year-on-year to a record 1.08 trillion yuan by the end of December.

By the end of last year, there were 1,016 offshore institutions trading in China’s interbank bonds. Six of them were newcomers that started trading in December.

The bond connect programme linking the mainland Chinese and Hong Kong bond markets, which was launched in July 2017, were a major investment channel. Some 728 overseas institutions opted for this channel last year, according to data in the public domain.

The inclusion of Chinese bonds in major international indexes has increased global investors’ passive allocation of Chinese bonds. For instance, CGBs were included in FTSE Russell’s World Government Bond Index in late October.

China bonds were included in the Bloomberg Barclays Global Aggregate Index in April 2019 and JPMorgan’s GBI-EM Index in February 2020.

The trend will likely continue this year, with up to $125 billion in foreign capital expected to flow into the Chinese bond market, thanks to their inclusion in major indexes, said Xia Yinyin, credit research analyst with UBS Securities.

CHINA DAILY/ASIA NEWS NETWORK

MOST VIEWED

  • Omicron patients can stay home: PM

    The Ministry of Health has issued a directive on the treatment of people who have tested positive for the highly transmissible Omicron coronavirus variant, following a suggestion from Prime Minister Hun Sen on the night of January 21. The directive permits home quarantine for those who

  • The effects of the USD interest rate hike on Cambodian economy

    Experts weigh in on the effect of a potential interest rate expansion by the US Federal Reserve on a highly dollarised Cambodia Anticipation of the US Federal Reserve’s interest rate hike in March is putting developing economies on edge, a recent blog post by

  • Cambodia’s first ever anime festival kicks off Jan 22 at capital’s F3 centre

    Phnom Penh's first ever Anime Festival will bring together fans, artists, shops and other local businesses with ties to the Japanese animation style for cosplay competitions, online games, pop-up shops and more on January 22, with Friends Futures Factory (F3) hosting. F3 is a project that

  • Hun Sen gets 4th Covid shot, urges compatriots to follow

    Prime Minister Hun Sen and his wife Bun Rany on January 14 received their fourth dose of Covid-19 vaccine and called on compatriots to follow suit as the Omicron coronavirus variant continues to spread in the community. This marks the launch of Cambodia's fourth-dose vaccination campaign,

  • Fourth dose Covid booster drive jabs 43K in two days

    In the first two days of the fourth-dose Covid-19 vaccination campaign, more than 43,000 people volunteered to get the jabs, while over 4.6 million people have received a third shot. Health ministry spokeswoman Or Vandine said that fourth-dose vaccinations, which began on January 14 exclusively with the Pfizer

  • Singapore backs Cambodia's efforts on Myanmar

    Singaporean Prime Minister Lee Hsien Loong supports Cambodia in its efforts to seek a solution to the ongoing Myanmar crisis as the chair of ASEAN. Lee expressed his support during a meeting with Prime Minister Hun Sen via videoconference on January 14, with the talks focused