bonds surge as investors seek safety
China’s bond market has quietly surged in recent weeks as the implosion
of its stock market drives demand for safe assets and the central bank
eases monetary policy to stabilise a slowing economy.
Yields on five-year government bonds have fallen from 3.47 per cent in
early April 今年前8个月，中国国债发行总量共计12.6万亿元人民币（合2万亿美元），较去年同期增长63%。
to 2.92 per cent yesterday. More than half of the decline has been since
Gross bond issuance totalled Rmb12.6tn ($2tn) in the first eight months,
of America Merrill Lynch)驻香港的利率策略师陈扬表示。
63 per cent on the same period a year ago.
China auctioned 10-year government bonds yesterday at the lowest yield
since 2008. Some investors are worried that the debt market, the
third-largest behind the US and Japan, has overheated.
“We have been bullish bonds throughout the year, but looking ahead a
sustained rally in bonds will probably require a further deterioration
in economic growth or more aggressive easing, which does not seem to be
likely,” Yang Chen, rates strategist at Bank of America Merrill Lynch in
Hong Kong, wrote recently.
Since China’s equity bubble burst investors have been seeking safer
options. The Shanghai Composite index tumbled 43 per cent from a
seven-year high on June 12 through to late August, though it has
recovered slightly since. “股市如此，大量资金无处可去，只能流入债券市场，”中泰证券(Zhongtai
Meanwhile, the property market, long the investment of choice for
savers, has been mired in oversupply amid falling prices.
“With the stock market like this, a lot of money has nowhere to go. It
can only flow into the bond market,” said Luo Wenbo, fixed-
income analyst at Zhongtai Securities.
Monetary easing and low inflation are pushing down interest rates. The
central bank has cut rates five times since last November and slashed
the ratio of deposits that banks must hold in reserve three times.
Analysts reckon figures published yesterday, showing a further slowing
in inflation in September, could prompt further easing.
Corporate bonds have gained even more strongly than government bonds,
with the spread between five-year government bonds and five-year
corporate bonds rate AAA shrinking from more than 100 basis points in
June to 75bp on Tuesday. 市场参与者称，最大的需求来源与银行向客户推销的理财产品和结构性票据有关。
Market participants say the biggest source of demand relates to
wealth-management products, structured notes that banks market 据行业研究组织CN
to clients. 基于债券的共同基金也出现了资金流入。基金管理公司正利用较低的短期借款成本加大投资组合的杠杆率。
Fixed income-based products accounted for about
30 per cent of all products in the first six months of the year, but
that rose to 60 per cent in the third quarter, according to CN Benefit,
a research group that tracks the industry. Ma Nan补充报道
Bond-based mutual funds have also recorded inflows. Fund managers are
taking advantage of low short-term borrowing costs to add leverage to
According to data from the central bank, foreigners held Rmb764bn of
onshore bonds at the end of June.