Type to search

China Government Bond Outflows Hit 7-Year High on Russia Sales

It was the steepest monthly percentage drop in foreign investors’ holdings of CGBs since August 2015, Reuters calculations showed


china yuan
James Wang of UBS said another avenue where a depreciating yuan could lower stock value is via unhedged foreign debt on the balance sheet. File photo: AFP.

 

Foreign investors cut their holdings of Chinese government bonds (CGBs) by 51.8 billion yuan in March to 2.43 trillion yuan ($382 billion), data from interbank bond market clearing house China Central Depository & Clearing Co showed.

It was the steepest monthly percentage drop in foreign investors’ holdings of CGBs since August 2015, Reuters calculations showed.

China’s net foreign bond outflows were a surprise, Nomura analysts said.

“We believe robust inflows from net trade settlements, foreign equity and net FDI may have more than offset foreign bond outflows,” they said in a note.

The Central Bank of Russia (CBR) and Russian sovereign wealth funds might have also sold some of their holdings of Chinese government securities as a precursor to Moscow’s invasion of Ukraine.

“This may raise some concerns over yuan selling pressure and bond outflows ahead as the CBR’s holdings of yuan securities could be about $83 billion,” Nomura said.

However, analysts said they remain optimistic that foreign bond inflows are likely to return in coming months in view of China’s improving macro outlook.

 

  • Reuters, with additional editing by George Russell

 

READ MORE:

Chinese Property Developer CIFI to Issue $250m in Bonds

Indonesia Buys Back $467m in Bonds to Manage Refinancing

Hyundai Shipyard Sells $300m in Green Bonds – Korea Herald

George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

logo

AF China Bond