Foreign investment in RMB bonds continues to increase for 38 consecutive months


At the beginning of the new year, the enthusiasm of foreign investors to increase their holdings of RMB bonds has continued unabated. According to the latest data released by CCDC, at the end of January 2022, the denomination of bond custody of foreign institutions in CCDC increased by 50.071 billion yuan to 3.73 trillion yuan, which has been rising for 38 consecutive months. Among them, the custody of treasury bonds by overseas institutions increased by 65.7 billion yuan, and the cumulative amount of treasury bonds held was 2.52 trillion yuan.

In addition, the People's Bank of China Shanghai Headquarters recently released a briefing on the investment in the inter bank bond market by overseas institutions, as of the end of January 2022, foreign institutions held 4.07 trillion yuan in bonds in the inter bank market, accounting for about 3.5% of the total custody of the inter bank bond market. . In terms of bond types, the main types of custody bonds of overseas institutions are government bonds, with a custody volume of 2.52 trillion yuan, accounting for 61.9%; followed by policy financial bonds, with a custody volume of 1.08 trillion yuan, accounting for 26.6%. According to data from the Foreign Exchange Trading Center, in January 2022, foreign institutional investors bought a net bond of 141.3 billion yuan, of which 783.2 billion yuan was bought and 641.9 billion yuan was sold.

More foreign institutional investors participated in the Chinese bond market in January. The data shows that as of the end of January 2022, 508 foreign institutional investors entered the market through the settlement agency model, and 1 new one was added in January; 734 foreign institutional investors entered the market through the bond connect model, and the number of new foreign institutional investors entered the market in January. 7. In addition, foreign institutional investors were more active in China's bond market in January, with a total of 1,425.1 billion yuan in spot bond transactions, an increase of 53% month on month.

In this regard, Wang Chunying, deputy director of the State Administration of Foreign Exchange, previously stated that the domestic economic fundamentals have strong support, the balance of payments structure is stable, the current account surplus is relatively stable, and foreign exchange reserves are relatively abundant, all of which support my country to better adapt to the external environment. Variety.

In recent years, foreign investors' allocation of Chinese bonds has grown into a long term strategy. Zhou Maohua, an analyst at China Everbright Bank, said that my country's economic development has been improving for a long time, and the financial market has deepened its high level opening to the outside world. RMB assets will attract global capital inflows. It is worth mentioning that recently, Chinese government bonds were officially included in the FTSE World Treasury Bond Index. This is the third international bond index to include Chinese bonds after the Bloomberg Barclays Global Aggregate Index and the JPMorgan Global Emerging Markets Diversified Index. So far, Chinese bonds have been fully included in the three major international bond indices.

It is worth mentioning that RMB assets are still attractive despite the overall upward trend in foreign bond market interest rates and the narrowing of Sino US bond spreads. Data show that in the first month of 2022, foreign institutions’ net purchases of RMB bonds increased by 51.6 billion yuan compared with December 2021.

In this regard, the co chief economist of CITIC Securities Mingming said that the dislocation of the Sino US monetary policy cycle has led to a narrowing of the Sino US interest rate gap, but it has not caused a large scale capital outflow. The main reason is that my country's economic growth has strong resilience. In 2022, under the goal of stable growth, increased fiscal expenditure will further increase the stability of my country's economic development. my country's economic growth is expected to be stable and will continue to attract overseas capital inflows.