Foreign Investors Added USD112 Billion in Chinese Bonds From Jan.-Sept.
Zhang Yushuo
DATE:  Oct 09 2019
/ SOURCE:  yicai
Foreign Investors Added USD112 Billion in Chinese Bonds From Jan.-Sept. Foreign Investors Added USD112 Billion in Chinese Bonds From Jan.-Sept.

(Yicai Global) Oct. 9 -- Foreign institutional investors added more than CNY800 billion (USD112 billion) worth of Chinese bonds to their holdings during the first three quarters as yuan-denominated bonds continued to entice overseas buyers.

Foreign institutions bought a net CNY110.8 billion worth of Chinese bonds last month, up 59 percent from August, the China Foreign Exchange Trading Center revealed yesterday. They purchased CNY319 billion and sold CNY208 billion worth, with the total transaction value sliding 15 percent from the previous month but growing more than 2.5 times on the year.

"From a global perspective, China's government bond yields are at a relatively high level and that's why foreign capital is entering the Chinese market" said Liu Yu, chief fixed income analyst at Guosheng Securites. "For foreign institutions, the China-US spread is more than 100 basis points, and the currency sovereign risk among G20 nations is quite low, making Chinese bonds attractive to international investors."

As of 9.30 p.m. yesterday Beijing time, China's 10-year government bonds paid 3.139 percent interest, giving a historically high spread against the US equivalent's 1.515 percent.

Foreign institutions made up just 3 percent of the total bond market volume in September, the CFETC added, saying commercial banks based overseas were the most active buyers making up 48 percent of transactions from abroad last month. Foreign central banks and foreign investment products made up 19 percent and 17 percent, with interest rate bonds the favored bills among investors.

Editor: James Boynton

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Keywords:   Yuan,Foreign Investment,Bonds