Across The Border | Better access to China’s bond market likely to lure international investors
Foreign ownership of onshore RMB denominated bonds accounts for just 2.4% - but analysts are predicting that’s now likely to rise.
The increasing levels of clarity surrounding the rules of access to China’s onshore bond market are likely to spark a significant rise in interest from overseas investors, according to analysts.
Foreign ownership still accounts for just 2.4 per cent of onshore RMB denominated bonds, despite the fact that since 2012 “China has virtually quadrupled approvals for some of its best-established investment vehicles, and has continued to accelerate approvals”, noted a recent white paper from Standard Chartered.
But with improved clarity surrounding new ways for overseas investors to access China’s onshore bond market, that level seems likely to increase.
One major development was the release on 27 May of detailed rules governing access to China’s interbank bond market (CIBM).
The People’s Bank of China announced it would alter the rules for foreign institutional investors looking to access the market in February.
Standard Chartered carried out the research for its white paper in March and April, and found 33 per cent of investors would consider using the new CIBM direct-access scheme, even though they were answering prior to the new, more-detailed rules being announced.