Foreign institutional investors keep increasing their holdings of Chinese bonds for 19 consecutive months. What makes China’s bond market attractive to foreign investors? Edmund Goh from Aberdeen Standard shared his views.
13 July 2020
In the first half of 2020, data from CCDC (China Central Depository & Clearing Co., Ltd.) shows an increase of RMB319.04 billion in foreign institutional investors’ holding of Chinese bonds, 2.3 times the same period last year. Foreign institutional investors keep increasing their holdings of Chinese bonds for 19 consecutive months, despite the COVID-19 pandemic. As of the end of June 2020, around 900 foreign institutions from nearly 60 countries have entered China interbank bond market. The amount of Chinese bonds held by foreign investors has reached RMB 2.4 trillion, accounting for 2.4% of the total, and the amount of government bonds held by foreign investors accounts for 9% of the total government bond markets.
What makes China’s bond market attractive for global investors? In terms of yield, diversification and liquidity, what sort of advantage does China’s bond market have, compared with other markets? And why local expertise is important in Chinese bond investment? ATC Initiative interviewed Edmund Goh, Investment Director of Aberdeen Standard, who gave his answers.
“It’s a bond market very difficult to avoid in the future. It’s a matter of time for foreign investors to get involved, no matter what channel or way you choose to invest. We think that is an advantage of getting in early to get familiar with the Chinese market.