This week, the yuan suddenly saw a sharp **, and the offshore market fell by 360 points against the dollar, with the largest decline exceeding 500 points at one point. However, if the 1961 points of the yuan in November are taken into account, the 360 points of this week are just an adjustment in the process. This ** has attracted widespread attention from the outside world, and people have begun to speculate about what caused the sharp fall of the yuan.
Some people believe that this is the result of foreign capital fleeing the Chinese market, and foreign capital may sell *** assets. However, the data shows that foreign capital has actually taken a big chunk of Chinese bonds. In September this year, China, Britain and Japan simultaneously sold US bonds, totaling $89 billion. In addition, in September this year, the total size of US bonds held by overseas investors decreased by $101.6 billion from the previous month. This suggests that more and more foreign investors are starting to sell US bonds instead of fleeing the Chinese market.
Although the constant interest rate hikes of the US dollar should attract overseas funds to the United States, in fact overseas funds are operating in reverse. At present, the problems faced by the US Treasury are becoming more and more large, the total amount of interest payments is getting higher and higher, and the issuance of new US bonds is becoming more and more difficult. The sell-off in various countries has not stopped, which makes it less and less likely for overseas funds to take over. As a result, overseas funds are shifting to other investment directions.
According to the latest data, overseas institutions have been ** Chinese bonds for nearly 9 consecutive months, with a cumulative amount of nearly 1 trillion yuan. In recent months, the volume has increased significantly, with $40 billion in October and $250 billion in November. The continued increase in foreign holdings of Chinese bonds and their increasing holdings of Chinese bonds in recent years illustrate the confidence of foreign investors in Chinese bonds.
This is a simple multiple-choice question, and overseas funds certainly need to consider the yield when buying bonds, but more importantly credit and safety. Chinese bonds are safer than other countries, so foreign investors choose to buy Chinese bonds in large quantities. According to the data, the total amount of Chinese bonds held by foreign institutions has increased by 200% from the beginning of 2018 to the present, reaching 33 trillion yuan. This further demonstrates the recognition and investment of foreign investors in Chinese bonds.
There are also some people who believe that foreign capital is flowing out of the Chinese market, mainly focusing on the outflow of northbound funds on the first place. In September and October, the net outflow of northbound funds exceeded 60 billion yuan, and in November, it was still a net outflow, but only 1.8 billion yuan. However, the bond market is a much larger market, with a net amount of nearly $1,000 billion in the past nine months. In contrast, the amount of northbound funds is very small, which is difficult to represent the attitude of foreign institutions.
In addition, given the recent sharp increase in the renminbi, there is every reason to believe that Chinese bonds will remain one of the important options for foreign investors for some time to come.
Although the recent sharp increase in the renminbi has attracted widespread attention from the outside world, the data shows that foreign investors are actually aggressively surging Chinese bonds, rather than fleeing the Chinese market. U.S. bonds are facing more and more problems, and overseas funds are selling U.S. bonds and choosing to buy relatively safe Chinese bonds. Despite the outflow of northbound funds, the net size of the bond market is larger, and foreign confidence in Chinese bonds remains high.
This article gave me a deeper understanding of the real reasons behind the sharp fall in the yuan. While the initial data may give the false impression that foreign capital is fleeing the Chinese market, a closer look reveals that the opposite is true. Foreign investors are buying Chinese bonds in large quantities because they are more secure and reliable than other investment channels.
Through an in-depth study of the sell-off behavior of foreign investors and the movements of China's bond market, we can see that foreign investors have continued to increase their holdings of Chinese bonds, and this trend has gradually strengthened in recent years. Foreign investors value the creditworthiness and safety of Chinese bonds, which makes Chinese bonds their preferred investment channel.
For me, this article not only provides information about the sharp fall of the yuan and the dynamics of foreign investment, but also makes me pay more attention to the development of the bond market and the direction of foreign investment. As an editor, I will continue to follow up on developments in this area and provide readers with more high-quality, in-depth analytical articles.