Liquidity and free flow of capital two biggest fears of Chinese bond investors
Appetite to invest in Chinese bonds remains strong as 83 per cent of international respondents to new survey say they plan to increase or maintain exposure
Liquidity in China’s secondary bond market and free flow of capital across borders are the two biggest concerns of global investors considering investing in the country’s onshore bond market, according to a new study.
The survey, led by regional trade association Asia Securities Industry & Financial Markets Association (ASIFMA) and six other partners, collected responses from more than 100 investors worldwide, representing total estimated global assets under management of over US$ 21 trillion.
The next biggest concern is technical barriers to participating in the market, mainly surrounding legal and operational issues including free repatriation of invested funds.
Respondents also said that clearer beneficial ownership rules and clarity on tax are more important than macroeconomic climate.
The survey garnered the opinions of 36 per cent of the top 50 investors in the US, 20 per cent of the top 100 investors in Europe and 27 per cent of the top 100 investors in Asia, the association said.
“Not surprisingly, the survey evidences that despite the opening of the Chinese bond market and progress made so far, greater transparency, legal certainty and predictability remain a key concern of foreign investors,” said Marc-Andre Bechet, director of legal and tax at the Association of the Luxembourg Fund Industry, one of the survey partners.