Foreign investors are bullish about Chinese sovereign government bonds, vigorously buying the yuan-denominated securities.
According to recent estimates, buying activity regarding Chinese government bonds peaked in the last four months. Offshore investments in Chinese bonds measured 42.2 billion yuan ($5.8 billion) in October 2023.
These securities comprise Chinese government bonds worth $1.7 billion and bonds to the amount of over $4 billion issued by large financial institutions such as the China Development Bank, the China Agricultural Development Bank, and the Export-Import Bank of China.
Remarkably, Beijing has a wonderful excuse to celebrate victory. Earlier, global investors and influential hedge fund managers were pessimistic about Chinese securities. Some market participants quit China’s bond and stock markets discouraged by low consumer activity and apprehending further contraction in the manufacturing sector. Some investors cut their holdings in Chinese securities. Besides, the collapse in the property market and geopolitical jitters also added to investors’ uncertainty.
Nevertheless, China’s authorities did not give up in the face of economic woes. They provided solid stimulus measures to the domestic bond market. In mid-2023, Beijing streamlined its budget and ramped up the issue of sovereign debt securities, aiming to revitalize local authorities.