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New Year bonds optimism sputters out


(ATF) An early lunar new-year jump in China bonds has petered out after three days.

The benchmark ATF China Bond 50 Index was little change Monday after the market reopened from the national holiday with a 0.06% leap. 

Gains in Corporate constituents were outweighed by heavy declines among state-owned enterprises, which fell on payment of a coupon by China National Petroleum Corporation. The ATF CB50 was at 106.99 after closing at 109.98 on Friday. The Corporates sub-index rose 0.04% while the Enterprise measure tumbled 0.08%  

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China’s bonds market, the world’s second-largest, reopened with a bang on February 18, with a 0.06% surge on the ATF CB50. That was fuelled in part by the offshore sale of a $250 million bond by Ping An, which boosted investor sentiment, and pent-up demand after the long break.

The index has recovered about half the losses inflicted by the pandemic downturn last year during which China’s economy registered its first quarterly decline generations. The market has climbed since September on a string of data that have shown China’s was the only major economy to grow in 2020.

The 5% bond of China National Petroleum Corporation fell 4.45 points on the returns-tracking index. Bonds tend to fall when their issuers make coupon payments because it reduces the pool of earnings left to be disbursed on the fixed-income assets.  

  

Mark McCord

Mark McCord is a financial journalist with more than three decades experience writing and editing at global news wires including Bloomberg and AFP, as well as daily newspapers in Hong Kong, Sydney and Melbourne. He has covered some of the biggest breaking news events in recent years including the Enron scandal, the New York terrorist attacks and the Iraq War. He is based in the UK. You can tweet to Mark at @MarkMcC64371550.

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