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CSOP sees strong inflows into China’s T-bonds

CSOP Asset Management said foreign institutional investors and some big holders of the offshore RMB are buying China’s treasury bonds.

The CSOP China Five-Year Treasury Bond ETF had a net inflow of RMB330m ($50m) after the Brexit outcome on June 24, and another RMB1bn on June 15.

“The China five-year government bond yields are still attractive, with more than a 2.7% yield per year. The loose monetary policy may push the bond price higher, so global investors have been investing in the China treasury bond market,” a spokesman told FSA.

Chinese bonds are also relatively attractive compared to the negative interest rates of government bonds in some European countries and in Japan. For example, the German and Japan 10-year government bond yields have a negative yield, the firm said.

The offshore RMB is comparatively strong against the sterling, the euro and other emerging market currencies, the spokesman added.

Year-to-date, the offshore RMB depreciated 1.4% against the US dollar, while the onshore RMB fell 2.3%. On a trade-weighted basis, however, the onshore RMB dropped 5.6% as of June 24.

By comparison, during the same period, the sterling dived 9.3% against the dollar.

The firm hopes that the opening of China’s interbank bond market will help draw more attention to China investment opportunities and encourage strong participation of global investors.


Performance of the 89 mutual funds selling in Hong Kong with investment in Chinese equities, versus that of the 46 funds with investment in yuan fixed income, according to FE Analytics.



Part of the Mark Allen Group.