Photo taken on Oct. 21, 2014 shows an interior view of the London Stock Exchange (LSE). The British government listed its first Renminbi (RMB) denominated sovereign bond on the London Stock Exchange (LSE) on the day. (Xinhua/Wu Xintao)
BEIJING, Sept. 8 (Xinhua) -- Foreign institutional investors saw their Renminbi-denominated bond holdings under custody with China Central Depository & Clearing Co., Ltd. (CCDC) up 30.5 billion yuan in August, reported Xinhua-run Xinhua Finance.
CCDC is one of the central securities depositories in China responsible for registration, custody, and settlement services of government bonds, financial bonds, bonds issued by government-backed institutions and bonds issued by state-owned or controlled enterprises.
The monthly holdings increase, however, dropped 59.54 percent from the comparable figure in July and included 17.3 billion yuan of T-bond holdings, down 65.4 percent month on month.
By the end of August, foreign institutions held 3.41 trillion yuan of bonds under custody with CCDC, of which 2.20 trillion yuan were T-bonds.
In August, foreign institutions contributed 871.90 billion yuan cash bond turnover on China's interbank bond market, much less than the 13.09 trillion yuan and 9.46 trillion yuan by commercial banks and securities firms.
Statistics with the Shanghai Head Office of the People's Bank of China (PBOC), the country's central bank, showed that foreign institutional investors possessed 3.78 trillion yuan of bonds on China's interbank bond market by the end of August, accounting for 3.4 percent of the total bonds outstanding on the interbank bond market.
By products, their holdings of T-bond and policy bank bonds on the interbank bond market were 2.20 trillion yuan and 1.06 trillion yuan, taking up 58.3 percent and 28.1 percent of their gross bond holdings on the interbank bond market by the end of last month.
The above data from the PBOC's Shanghai Head Office is the sum of foreign institutions' bond holdings under custody with CCDC and Shanghai Clearing House, another central securities depository responsible for registration, custody, and settlement services for corporate bonds on the interbank bond market in China.
Currently, Renminbi-denominated bonds boast long-term investment value and advantages in valuation given their high yield spreads over comparable products in developed economies and relatively low risks and stable prices compared with the comparable bonds of emerging markets, said analysts.
In the future, Renminbi-denominated bond holdings of foreign institutional investors may step into a phase of rapid growth as Chinese government bonds will be gradually included in the FTSE World Government Bond Index (WGBI) from October, analysts noted. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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