Foreign purchases of Chinese bonds double to US$19.4 billion in May as ‘hot money’ flows in
- Inflows likely a result of global monetary easing amid the coronavirus outbreak, analysts say
- Chinese banks also report 61 per cent rise in forex trading in month as firms, individuals convert dollars into yuan
According to figures released by the State Administration of Foreign Exchange on Friday, net purchases of bonds by foreign funds rose by 104 per cent from April to US$19.4 billion.
Meanwhile, Chinese banks reported a 61 per cent increase in foreign exchange trading to US$23.8 billion, the agency said, suggesting a growing willingness among Chinese individuals and companies to convert US dollars into yuan.
The figures confirmed the trend of strong capital inflows seen in data from other institutions. The latest figures from the Shanghai Clearing House, which records onshore bond positions, show that foreign ownership of China’s onshore bonds has risen to a record high.
The outstanding positions of onshore Chinese bonds owned by non-mainland investors amounted to 2.43 trillion yuan (US$343.4 billion) at the end of May, or 2.6 per cent of the total – its highest proportion ever.
In May alone, foreign investors increased their holdings of Chinese bonds by 114.6 billion yuan, marking the largest rise for 18 months, the clearing house said.