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)
BEIJING, Jan. 17 (Xinhua) -- Overseas institutional investors added around 280 billion yuan of Renminbi-denominated bond holdings on China's interbank bond market last year, reported Xinhua Finance citing data released by the Shanghai Head Office of the People's Bank of China on Tuesday.
By the end of 2023, overseas institutions held in total 3.67 trillion yuan of RMB-denominated bonds on China's interbank bond market, accounting for about 2.7 percent of the aggregate bonds under custody on the interbank bond market.
After reporting the second highest monthly holdings increase in November 2023, overseas institutional investors continued their buying paces in December last year and raised their bond holdings on interbank bond market by around 480 billion yuan in the fourth quarter of 2023.
Analysts attributed their purchasing of RMB-denominated bonds to the expected ending of the interest rate hike cycle of major economies, rebounding exchange rate of RMB and the ongoing financial market opening up in China.
Yu Lifeng, senior analyst with the research and development department of Golden Credit Rating International Co., Ltd., deemed that the mild appreciation of RMB against the U.S. dollar shored up overseas investors' willingness to hold more RMB-denominated bonds as by the end of 2023, the exchange rate of RMB against the U.S. dollar appreciated 2.1 percent over the end of August last year.
Recent years, the southbound Bond Connect, Cross-Boundary Wealth Management Connect in the Guangdong-Hong Kong-Macao Greater Bay Area, access to futures and options trading for qualified foreign institutional investors (QFIIs) and other opening-up moves such as northbound trading of Swap Connect and RMB-denominated T-bond futures listed on the stock exchange of Hong Kong all contributed to further improvement of the liquidity of RMB-denominated financial assets and facilitating entering of overseas investors into the China market.
In 2024, the yield spread between U.S. and Chinese T-bonds of the same terms and the trend of RMB exchange rates will continue to be the dominant factor to affect the overseas investors' purchasing favor for bonds in China.
Under such circumstances, Yu expected that the further declines of U.S. government bond yield, the strengthening anticipation for appreciation of RMB and the likely booster to market confidence from China's policies to stabilize economic growth will spur overseas investors to add holdings of RMB-denominated bonds in 2024. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
A single purchase
