Foreigners are snapping up China’s bonds

Source:Global Times Published: 2019/12/3 13:43:40

The China Foreign Exchange Trade System building in Shanghai on August 24. Photo: VCG

Foreign investors have been reinforcing their purchasing power on Chinese bonds, official data showed. Analysts give credit to the reform and opening-up in China's bonds market, and bigger interest rate spreads between Chinese bonds and foreign bonds. 

Foreign investors jumped at Chinese bonds in the first 11 months of the year, with cumulative net purchases reaching 970.2 billion yuan ($137.77 billion), data from the China Foreign Exchange Trade System (CFETS) showed on Monday. That meant the total cumulative net purchases from foreign investors have approached nearly 1 trillion yuan in the first 11 months.

In November, transactions by foreign investors came to a total of 567 billion yuan, up 5 percent month-on-month and 127 percent year-on-year, CFETS said. 

November was the 12th consecutive month that foreign investors snapped up Chinese bonds. It is also notable that the number of foreign investors new to China's interbank bonds market in the first 11 months - 1,331 - has surpassed the total number in previous years. 

The reforms and opening-up in China's bonds market have enabled more foreign investors to enter China's financial market, as reflected by the Shanghai-Hong Kong Stock Connect, the Shanghai-London Stock Connect and the country's great efforts to build the yuan's offshore financial market, Liu Xuezhi, a senior economist at the Bank of Communications, told the Global Times on Tuesday. 

"In addition, the risk of investing overseas is increasing with a declining yield rate under the pressure of the global economic downturn … but China's bonds have relatively good returns on investment," Liu noted, adding that foreigners' increasing purchasing power shows their confidence in China's economy. 

2019 marks the lowest-performing year for global bond yields, but the interest rate spreads between Chinese bonds and foreign bonds have surged to an historical peak, the China Securities Journal reported on Tuesday. Statistics showed the 10-year bond spreads between China and the US have surpassed 140 basis points, which is relatively high historically, the report said. 


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