Tag Archives: china onshore
Asian Fixed Income: China Was the Worst-Performing Country in the Pan Asian Bond Market
China’s lackluster performance has made it the worst-performing country in the Pan Asian bond market this year. While China has been among the top three outperforming regions in the past few years, it has significantly lagged its peers in 2017. Indonesia, as represented by the S&P Indonesia Bond Index, rose 12.6% YTD as of Nov….
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Asian Fixed Income: The Birth of Bond Connect
As a follow up to the previous article, Bond Connect officially launched on July 3, 2017. Bond Connect allows international market participants to trade China’s interbank bonds through the Hong Kong Stock Exchange. It marked a milestone in China to further open up its capital market, following the China Interbank Bond Market (CIBM) announcement last…
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Asian Fixed Income: PBOC Has Widened Access to China’s Onshore Bond Market for Foreign Investors
On Feb. 24, 2016, the People’s Bank of China announced that offshore commercial banks, insurance companies, securities companies, fund management companies, and pension funds are free to invest in China’s interbank bond market. Previously, foreign investors could only access China’s onshore bond market through a QFII or RQFII quota. The removal of the quota system…
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Asia Fixed Income: People’s Bank of China (PBoC) Rate Cuts
On June 28, 2015, the PBoC announced a 25 bps policy rate cut and a 50 bps targeted reserve ratio cut to support growth. Following the news, the money market rate opened lower and the yuan weakened. While there was no significant or immediate impact on China’s onshore bond market, the yield-to-maturity tracked by the…
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Asia Fixed Income: Opening of the China Onshore Repo Market
On June 3, 2015, the PBoC announced the opening of the China onshore repo market; the offshore RMB-clearing and participating banks will be allowed to trade bonds on repos in the onshore interbank bond market. This is an important development for the offshore RMB market, as it will broaden the offshore RMB supply and support…
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What are the Missing Pieces in Chinese Fixed Income?
As of April 30, 2015, the fixed income ETF market in China totaled CNY 8 billion; it is only 0.03% of the total market value tracked by the S&P China Bond Index. The fixed income ETF market in China is small when comparing with that of the U.S., which totaled USD 321 billion as of the…
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Asia Fixed Income: Foreign Investor Access to Onshore Chinese Bond Markets Grows
China continues to broaden foreign investor access to their onshore bond market. Luxembourg is the latest country being granted an RQFII quota by the People’s Bank of China, followed Canada, Germany, Qatar and Australia. According to the data published by State Administration of Foreign Exchange (SAFE) on April 29, 2015, the approved RQFII investment quota…
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Asia Fixed Income: China Onshore vs. Offshore
The China offshore renminbi (CNH) bond market has been serving some investors as a gateway to Chinese bonds until the Renminbi Qualified Foreign Institutional Investor (RQFII) program takes off. The size of offshore renminbi market is approaching CNH 800 billion, yet it is relatively small when compared with the CNY 27 trillion onshore bond market,…
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Asia Fixed Income: Diversifying into Chinese Bonds
Global investors continue to explore investment opportunities in China onshore bond market. Chinese bonds undeniably offer higher yields than other major bond markets. As of Nov 5, 2014, the yield-to-worst of the S&P China Bond Index stood at 4.09% with a modified duration of 4.15, see Exhibit 1. Exhibit 1: Yield Comparison More importantly, investing into…
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Getting there – China Municipal Bond Market
China has recently announced some potential changes in its municipal bond market, which will allow the local governments to sell bond on their own credits, as opposed to the majority of local government bonds that are currently issued by the Ministry of Finance. The coverage is targeted to expand to Beijing, Jiangxi, Ningxie and Qingdao, in…
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