Foreign Institutions Step Up Holdings of China Government Bonds

May 11th, from WikiFX news. Data shows foreign institutions increased holdings of Chinas government bonds by 70,671 million yuan in April, raising their holdings of yuan bonds for the 17th consecutive month.

Bonds held by foreign institutions in CCDC amounted 2,001,136 million yuan, passing the 2 trillion mark for the first time and an 30.45% increase year-on-year.

The continuous increase of foreign investment in Chinese government bonds indicates that the Chinese bond market is becoming more attractive to the external world thanks to many reasons:

First, the opening up of China's bond market has continued to accelerate, offering better access for foreign capital to enter the Chinese bond market.

Second, China is on a track of fast economic recovery after controlling the coronavirus pandemic effectively. Renminbi assets, due to the currency‘s relatively stable exchange rate, has demonstrated its advantages as a safe-haven, boosting foreign investors’ confidence in the Chinese market.

Third, after a new round of QE across the globe, Chinese government bonds will benefit from the relatively high spread compared with foreign bonds, and achieve higher investment value.