Xinhua News Agency, Beijing, Feb. 21 (Xinhua) -- A number of foreign banks continue to be optimistic about China's bond market.
Xinhua News Agency reporter Ren Jun.
Wang Chunying, deputy director and spokesperson of the State Administration of Foreign Exchange, recently said that from September to December last year, foreign investors continued to increase their holdings of domestic bonds by more than US$60 billion, showing that more foreign investors allocated RMB assets. A number of foreign-funded financial institutions said in an interview with reporters that as China's economy continues to recover and improve, the opening up of China's bond market continues to increase, and they will continue to be optimistic about China's bond market.
Bond Connect upgraded.
Since January this year, China's bond market has been opened up frequently, and the convenience of foreign investment in China's bond market has been continuously improved. The reporter noted that as an important mechanism to promote the orderly connection between the mainland and the global bond market, the "Bond Connect" has ushered in two important opening measures.
On the one hand, RMB sovereign bonds and policy financial bonds under the Northbound Cooperation under Bond Connect will be included in the list of eligible collateral for the RMB Liquidity Arrangement. On the other hand, the Announcement on Further Supporting Foreign Institutional Investors to Carry out Bond Repurchase Business in the Interbank Bond Market (Consultation Paper) was announced, which intends to support all foreign institutions that have entered the interbank bond market to participate in bond repurchases.
The reporter learned that this is the first time that the collateral function of domestic bonds has been established in the offshore market, which is conducive to increasing the willingness of overseas institutions to hold bonds and enhancing the attractiveness of China's bond market.
In addition, the scope of participants in the bond repurchase business has been further expanded and diversified, which will help meet the growing investment and financing needs of foreign institutions, as well as the needs of risk hedging management and liquidity management tools, and further enhance the internationalization of the RMB.
DBS Bank (China)** Head of Bond Underwriting said that the implementation of the bond repurchase business will further improve the infrastructure of the bond market, making it easier for overseas investors to liquidate their interest rate bonds and allocate mainland credit bond products.
According to the data, by the end of 2023, a total of 1,124 overseas institutions have entered the Chinese bond market, covering more than 70 countries and regions, and the total number of Chinese bonds held is 3RMB72 trillion, an increase of 340% compared with before the launch of Bond Connect.
The number of foreign-funded bond underwriting institutions has been expanded.
On January 18, the National Association of Financial Market Institutional Investors (NAFMII) announced that 10 new foreign-funded institutions were added as lead underwriters and underwriters of debt financing instruments for non-financial enterprises. The number of foreign-funded underwriting institutions has been further expanded and the structure has been further optimized.
HSBC Bank (China)** has obtained the qualification of general lead underwriting of debt financing instruments for interbank non-financial enterprises. "At present, foreign investors hold Chinese bonds mainly concentrated in government bonds, policy financial bonds and other interest rate bonds, and there is still a lot of room for improvement in the allocation of credit bonds, we will do a good job in promoting the Chinese market and introduce more high-quality foreign investors for the financing of local issuers. Cheng Zhuoxiong, Executive Vice President and Deputy Chief Executive Officer of HSBC China, said.
After obtaining the qualification for general lead underwriting of debt financing instruments for interbank non-financial enterprises, we will focus on supporting the issuance of debt financing instruments in line with China's macroeconomic development and industrial policies, helping issuers achieve low-carbon transformation and high-quality development through green bonds, and supporting bond financing for micro, small and medium-sized enterprises. Yang Jing, vice president of Standard Chartered Bank (China) ** and general manager of the financial market department, said.
According to the Bank of East Asia (China)**, the qualification of underwriter of debt financing instruments for interbank non-financial enterprises is conducive to further expanding the business territory of the capital market and participating more deeply in the interbank bond market.
China's bond market shows a strong "magnetic force".
In 2023, affected by factors such as interest rate hikes by European and American central banks, the relative attractiveness of the absolute coupon rate of Chinese bonds has weakened, but the Chinese bond market still shows a strong "magnetic force".
Cheng Zhuoxiong believes that China's economic rebound, the continuous introduction of stimulus measures, and the steady acceleration of economic structural transformation have made the investment value of RMB assets better reflected.
China's bond market has jumped to second place in the world. Generally speaking, Chinese bonds have a low correlation with European and American bonds, and their ups and downs are less synchronized. Allocation to Chinese bonds has become a must for more and more international investors. Chen Mingqiao, head of the Asian financial markets department of Standard Chartered Group, said.
Looking ahead to 2024, a number of foreign institutions said they will continue to be optimistic about China's bond market.
A research report on China's bond market by Standard Chartered Bank believes that with the Federal Reserve expected to cut interest rates and the pace of RMB internationalization accelerating, it is expected that foreign capital will continue to net Chinese bonds in 2024, and the number of foreign institutions investing in China's bond market will also further increase.
Fang Zhongrui, head of Deutsche Bank's China debt capital markets and vice president of Deutsche Bank China Beijing Branch, believes that China's financial opening up has been steadily advancing beyond expectations, and Deutsche Bank is optimistic about the development prospects and potential of RMB financing.
As one of the first foreign banks to obtain a full license for underwriting business in China's interbank bond market, Deutsche Bank will continue to leverage its business advantages to provide debt capital market financing solutions for issuers with different credit backgrounds, and will continue to support the business development and financing needs of international issuers in China, so as to promote the opening up of China's capital market and the long-term development of China's bond market. Fang Zhongrui said.
*: Xinhuanet).