China posts first debt inflows of 2023 with US$3 billion added in July, but weak economy set to limit sustainability
- US$3 billion was added to China’s debt market in July, ending a run of six straight months of outflows, the Institute of International Finance (IIF) said
- Chinese equities also posted US$7.7 billion worth of inflows, but the rebound is unlikely to be sustained due to China’s weak economic performance
Chinese debt saw a net inflow of funds from foreign investors for the first time this year in July as optimism grew on the wider emerging market assets, according to the Institute of International Finance (IIF).
Chinese equities also posted US$7.7 billion worth of inflows from overseas funds in July, the IIF said, compared with June’s inflow of US$1.9 billion.
“For the case of debt flows, our data shows July 2023 as the first month of China debt in positive territory, breaking a six-month tendency of outflows from this category,” the Washington-based IIF said in its monthly capital flow tracker.
Diminished currency volatility enhances the allure of carrying offshore, and is encouraging foreign creditors to benefit across emerging market local yield curves
“Diminished currency volatility enhances the allure of carrying offshore, and is encouraging foreign creditors to benefit across emerging market local yield curves, making debt assets more attractive to foreign investors.