Foreign investors add holdings of China bonds for 31Ms in a row by end-June

Participants attended a ceremony held by Hong Kong Exchanges and Clearing Limited (HKEX) to launch the "northbound" Chinese mainland-Hong Kong Bond Connect scheme in Hong Kong, south China, on July 3, 2017. (Xinhua/Wang Shen)

Foreign investors added for 31 months in a row their holdings of bonds traded on China's interbank bond market by the end of June, reported Xinhua-run Xinhua Finance citing data from China Central Depository & Clearing Co., Ltd. (CCDC) on Monday.

Their aggregate holdings of bonds under custody of CCDC, the central depository of government-backed bonds and state-owned or controlled enterprise bonds grew 36.57 billion yuan from the end of May to 3.3 trillion yuan by the end of June.

Currently, foreign institutions can enter China's interbank bond market via the China interbank bond market (CIBM) Direct scheme and the Bond Connect.

Statistics with CCDC showed that bonds held by foreign institutional investors via transaction through the CIBM Direct and Bond Connect stood at 2.40 trillion yuan and 903.62 billion yuan respectively by the end of June, 11.61 billion yuan and 24.66 billion yuan more than the figures by the end of May.

In June, foreign investors subscribed via the two schemes 930 million yuan and 436 million yuan of new bonds issued on the primary market, an increase of 620 million yuan and an decrease of 1.69 billion yuan over May, respectively.

CIBM Direct is a key route for international investors to access China's interbank bond market and trade onshore bonds directly. Bond Connect is a mutual market access scheme that allows investors from the Chinese mainland and Hong Kong to trade in each other's bond market. Under the Bond Connect scheme, northbound trading commenced in July 2017 while southbound trading will be explored at a later stage.

By the end of June, the total bonds outstanding on China's interbank bond market mounted up to 80.80 trillion yuan, one trillion yuan more than that at the end of May. In June, new bond issues reached 2.04 trillion yuan, including 476.41 billion yuan of T-bonds, 794.87 billion yuan of local government bonds and 477.76 billion yuan of policy bank bonds.

Previously on the fourth anniversary forum of Bond Connect held on July 2, Zhang Yi, board chairman of Bond Connect Company Limited (BCCL), a joint venture established to support Bond Connect related trading services, said that BCCL will further optimize services of the northbound trading and well complete, pursuant to arrangements of the Chinese central bank, preparations for the southbound trading to boost two-way opening up of China's bond markets in the future.