Overseas institutions seen more active in cash bond trading on interbank market in April

Updated: May 20, 2022 Source: Belt and Road Portal
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Participants attend a ceremony held by Hong Kong Exchanges and Clearing Limited to launch the "northbound" mainland-Hong Kong bond connect in Hong Kong, south China, July 3, 2017. (Xinhua/Wang Shen)

Overseas institutional investors became more active in cash bond trading on China's interbank bond market in April, with their gross turnover at 1.02 trillion yuan, up 13 percent year on year, reported Xinhua Finance citing data from China Foreign Exchange Trade System (CFETS) on Thursday.

Overseas institutions contributed altogether about five percent of the total cash bond turnover on the interbank bond market in April and maintained a strong willingness to participate in China's bond market.

In April, two more overseas institutions entered the interbank bond market and brought the total number by the end of April to 1,035, with 514 ones having accessed the interbank bond market via China Interbank Bond Market Direct (CIBM Direct) scheme, 749 ones through the Bond Connect and 228 ones via both of the two channels, according to statistics released by the Shanghai Head Office of the People's Bank of China on Tuesday.

By the end of April, overseas institutions held in total 3.77 trillion yuan of bonds on the interbank bond market, accounting for about 3.2 percent of the total comparable bonds inventories of the same period.

Compared with March, they reduced their bond holdings on the interbank bond market by 110 billion yuan and 63.4 percent or 2.39 trillion yuan of their bond holdings by the end of April were Treasury bonds (T-bonds).

Analysts said that overseas investors favoring the Chinese T-bonds most showed their confidence in the economic fundamental of China.

Ming Ming, joint chief economist with CITIC Securities said the most stressful stage for overseas investors to reduce RMB-denominated bonds has already passed. Alongside the market digestion of certain short-term factors, overseas investors' investment in China's capital market is expected to return back to a steady state, said market players, highlighting that China bonds boast relatively high value, which will help encourage overseas investors to add RMB-denominated bond holdings. 

Editor: Yu Huichen