Recently, the RMB exchange rate has seen an unexpected sharp **. Although the yuan has been in a **trend for the past few weeks, this week it has suddenly seen a ** of 360 points. Although this range is nothing compared to 1961 points in November, it still attracted widespread attention from the market. There has been speculation that foreign capital may be fleeing the Chinese market, but the data shows that foreign capital is actually surging Chinese bonds, producing a very different reaction.
1.Foreign Sell-off of U.S. Bonds: While successive U.S. interest rate hikes should attract foreign capital into the U.S. market, the opposite is true. More and more foreign investors, including central banks and investment institutions, are selling US bonds. China, Britain and Japan sold US bonds in a synchronized manner in September this year, with a cumulative scale of $89 billion. Overall, the total size of US bonds held by overseas investors decreased by US$101.6 billion in September from the previous month. This means that overseas investors' enthusiasm for US bonds is gradually decreasing.
2.Attractiveness of Chinese bonds: In contrast, Chinese bonds appear more attractive. According to the latest data from the central bank, foreign institutions have reached nearly 9 consecutive months of Chinese bonds, and they are in a net state. Recently, the increase in the volume has been more obvious, of which 40 billion yuan was reached in October alone. The amount is expected to reach RMB250 billion in November. The reason for foreign-owned** Chinese bonds is mainly based on their safety and reliability. Compared with U.S. bonds, Chinese bonds are more credible and safe, so foreign investors' enthusiasm for Chinese bonds continues to rise.
3.Growth in foreign ownership of Chinese bonds: The total number of foreign institutions that have entered China's bond market has now reached 1,110, with an average of more than 100 new institutions added each year. Since the beginning of 2018, the total amount of Chinese bonds held by foreign institutions has increased by 200% to 33 trillion yuan.
4.Northbound flows confirm foreign investors' interest in the Chinese market: Some people are concerned about northbound capital outflows, arguing that they represent foreign attitudes towards the Chinese market. However, in fact, northbound funds are investments in the ** sector, which is relatively small compared to the bond market. Although there was a net outflow of northbound funds in September and October, the net outflow in November was only RMB1.8 billion. At the same time, the net amount of foreign bonds to China in the past nine months was close to RMB1,000 billion. Therefore, the flow of northbound funds does not represent the overall attitude of foreign investors towards the Chinese market.
1.Security and creditworthiness: Chinese bonds are safer than U.S. bonds. Despite the size of the U.S. bond market, it faces a growing number of problems, including scale growth, increased interest expenses, and difficulties in issuing new debt. Foreign investors tend to choose Chinese bonds that are relatively safe and more creditworthy.
2.Yields: The relatively high yields of Chinese bonds have also attracted the attention of foreign investors. While investors need to consider the yield from buying bonds, the yields of Chinese bonds show a significant competitive advantage over other markets.
1.Funding Supply: Foreign investors continue to provide more financial support for the Chinese market. This helps to improve market liquidity and support economic development and the healthy functioning of financial markets.
2.Bond market development: The large-scale foreign investment** will also contribute to the further development and improvement of the bond market. With the increase in the participation of foreign capital, market competition will intensify, and the scale and specialization of the bond market are also expected to be further improved.
3.RMB internationalization: The continued foreign investment in Chinese bonds** will help promote the internationalization of the RMB. As an important part of RMB assets, the popularity of Chinese bonds will further increase, and the international status of the RMB will also be strengthened.
Recently, the situation of the RMB has been sharply **, and the situation of foreign-funded Chinese bonds has attracted widespread attention. However, the data shows that the continued flow of foreign investors to Chinese bonds has not been affected. The reasons why foreign investors choose Chinese bonds are mainly based on their safety and credibility, relatively high yields and other factors. Foreign-owned** Chinese bonds will provide more financial support for the Chinese market, promote the development of the bond market, and promote the internationalization of the renminbi.
Personally, the trend of foreign-owned** Chinese bonds shows that China's position as an important player in the global economy is gradually recognized. China's bond market is growing rapidly, attracting more foreign investment. In the future, with the opening up of China's financial market and the deepening of the bond market, with the participation of foreign capital, China's bond market will continue to grow and provide investors with more opportunities and choices.
It is hoped that through this article, readers will be able to better understand the situation of the renminbi and foreign ** Chinese bonds, and have a clearer understanding of the Chinese bond market and its prospects.