Our reporter Xie Ruolin
Trainee journalist Mao Yirong
The enthusiasm of foreign institutions to allocate RMB assets continues to run high. Data from the State Administration of Foreign Exchange showPennbattleiiidx5000In April, foreign investors bought 124.7 billion yuan of domestic bonds and 45.1 billion yuan of stocks respectively. So far, foreign institutional investors have increased their holdings of Chinese bonds for eight months in a row.
While foreign institutions are "buying", the main body participating in China's bond market is also expanding. As of the end of April, a total of 1129 foreign institutions had entered the interbank bond market, according to the Shanghai headquarters of the people's Bank of China.
Thus it can be seen that the attractiveness of RMB assets is increasing, and China's bond market shows a strong "magnetic force".
Foreign investors
Continue to increase positions in China's bond market
According to data released by the Shanghai headquarters of the people's Bank of China, as of the end of April, foreign institutions held bonds in the interbank market.Pennbattleiiidx5000.05 trillion yuan, accounting for 2% of the total escrow volume of the interbank bond market.Pennbattleiiidx5000.9%.
The types of foreign bond investment in China tend to be diversified, and the trading volume has increased significantly. Xu Zhaoting, general manager of Deutsche Bank's China investment banking department, observed that the proportion of domestic bond investment other than treasury bonds and policy bank bonds rose from 12% in March 2023 to 23% in March 2024, and its holdings rose sharply from 372.4 billion yuan to 920 billion yuan. At the same time, the trading volume in the inter-bank market of overseas institutions increased significantly, with the average daily trading volume rising from 61.7 billion yuan in March 2023 to 88.5 billion yuan in March 2024. The attractiveness of China's bond market to foreign investors is rising rapidly.
"since September last year, foreign institutions have increased their holdings of domestic bonds for eight consecutive months, and in April, foreign institutions increased their holdings of domestic bonds by more than 100 billion yuan, indicating that the attractiveness of RMB assets has been significantly enhanced by the increase in internal and external positive factors. the allocation value of RMB bonds is prominent." Yu Lifeng, senior analyst of Oriental Jincheng Research and Development Department, told Securities Daily.
According to Yu Lifeng's further analysis, first, RMB assets are highly secure and are favored by foreign investors as "risk aversion" assets.Pennbattleiiidx5000Second, domestic monetary policy remains loose, and investors generally believe that there is room for RMB bond prices to rise in the future; third, recent economic data show that the domestic economy continues to pick up, while data from some overseas economies are weak. the RMB has potential room for appreciation, further driving foreign investment to increase the allocation of RMB bonds.
Foreign investors increase their holdings of RMB bonds
The space is still large.
Since the mainland and Hong Kong interest rate swap market interconnection cooperation (hereinafter referred to as "swap") was officially launched on May 15, 2023, the overall operation has been stable and the number of participants has increased steadily. By the end of April 2024, 20 domestic bidders and 58 foreign investors had reached more than 3600 RMB interest rate swap transactions, with a total nominal principal of about 1.77 trillion yuan, according to the Hong Kong Securities Regulatory Commission. The monthly average daily turnover has tripled in the past year, from about 3 billion yuan in the first month of launch to more than 12 billion yuan in April 2024.
Recently, swaps ushered in further upgrades. On May 13, the people's Bank of China, the Hong Kong Securities Regulatory Commission and the Hong Kong Monetary Authority jointly announced that they supported the further optimization of the "swap" mechanism, including the new "swap" contract compression function, new historical interest-bearing contracts and IMM (International money Market) contracts, and extending the implementation period of full reduction of transaction fees.
"this will better meet the trading needs of overseas asset managers, facilitate foreign investors to participate in the mainland interbank interest rate swap market, enhance the vitality of the market, and help the RMB interest rate swap market to be further in line with international standards. It is conducive to promoting the long-term development of the financial markets of Hong Kong and the mainland and promoting the process of RMB internationalization." The Hong Kong Stock Exchange said.
In the future, there is still a lot of room for foreign institutions to increase their holdings of RMB bonds. With the further improvement of China's importance in the global economy, the continuous improvement of financial infrastructure and the further opening of the bond market, it is a general trend for foreign investors to continue to increase the allocation of RMB bonds.
Yu Lifeng said that at present, RMB bonds are still in the initial stage of foreign capital inflow. In the future, with the further improvement of the infrastructure of the domestic credit bond market, the variety of domestic bonds held by foreign investors will be further enriched and the scale will continue to expand.
Talking about the expectation of improving the bond market system and further opening up, Yu Lifeng believes that in the future, the domestic bond market will continue to steadily promote institutionalization and opening up, expand international cooperation, and continue to promote infrastructure connectivity in domestic and foreign bond markets.
"Foreign investors have a strong interest in more diversified interest rate hedging tools, such as treasury bond futures." Xu Zhaoting said that the Hong Kong Stock Exchange may launch treasury bond futures products in the second half of this year to meet the trading needs of foreign investors for treasury bond futures.