(Economic Observer) What are the risks and opportunities in the bond market in 2021?
China News Service, Beijing, January 13th, title: What are the risks and opportunities in the bond market in 2021?
China News Agency reporter Wei Xi
In the past year, as the only major economy in the world that achieved positive economic growth, China's bond market has also developed rapidly.
As of the end of 2020, the stock of bonds in China's bond market has exceeded RMB 114 trillion, a year-on-year increase of 17.5%, and the net bond financing for the year reached RMB 17.34 trillion.
As an important part of the capital market, China's bond market plays an important role in supporting the development of the real economy, ensuring the effective transmission of monetary policy and the effective allocation of financial resources.
In 2021, when the global economy is expected to gradually recover from the epidemic, what are the risks and opportunities in the bond market?
Long-term low interest rates are the main challenge
Li Yang, member of the Faculty of the Chinese Academy of Social Sciences, chairman of the National Finance and Development Laboratory, and chairman of the First Venture Bond Research Institute, said that when he attended the "6th China Bond Forum" on the 12th, the long-term negative interest rate and ultra-low interest rate Transformation is the main challenge.
Since the end of the last century, the world has entered a period of low interest rates. The global financial crisis that began in 2008 has further brought countries into a period of ultra-low interest rates.
In November 2020, the Fed's meeting on interest rates announced again to maintain the 0-0.25 interest rate unchanged, which in fact further confirmed the continuation of the global ultra-low interest rate pattern.
"Interest rates are extremely low and have lasted for 20 years, obviously challenging the traditional order of financial operations." Li Yang believes that this will have three impacts on China: First, long-term ultra-low and negative interest rates have affected China's international financial environment. ; Second, because China still maintains a positive interest rate, the expansion of the interest rate gap between China and foreign countries causes capital inflow pressure, which invigorates the bond stock market and promotes the internationalization of the renminbi, while also increasing the test of China’s management capabilities; third, it will lead to financial The operating conditions have deteriorated.
To this end, Li Yang proposed four countermeasures: In the dual-cycle pattern, we should pay more attention to internal balance and rationally use the interest rate cut space; cross-border capital flows should be liberalized in a cautious, controlled, and orderly manner; and the supply-side structural reform should be deepened. ; Accelerate domestic financial reform, especially the reform of commercial banks, pension institutions, and non-bank institutions.
Promote the interconnection of financial infrastructure
Zhou Chengjun, director of the Financial Research Institute of the People's Bank of China, believes that the current fragmentation of domestic bank accounts and bond accounts is not only low in efficiency and high in cost, but also brings some problems in risk control and compliance management.
Zhou Chengjun said that the interconnection of financial infrastructure is very important.
To this end, it is necessary to promote the establishment of an efficient bond account system that conforms to international practices, can improve transaction settlement efficiency, and protect investors' rights and interests, as well as a registration and custody system behind it.
He called on the bond market to establish a relatively unified bond account system or registration and custody system to realize the transfer of bonds between different accounts and the free flow of the entire market.
The unified bond account structure shows that all bonds are registered and custody by a super institution. Corresponding to the final registration and custody system is the establishment of a multi-level account system to form several sub-accounts under the primary custody account.
The economy gradually returns to the right track, good for the market
Wang Fang, president of First Capital Securities Co., Ltd., believes that looking forward to the bond market in 2021, although the global low interest rate environment will continue, the gradual return of the domestic economy to the right track will promote the normalization of monetary policy.
She said that the World Bank and the International Monetary Fund both predict that China's GDP growth rate will reach about 8% in 2021. With the strong economic performance in the first half of the year, market interest rates are expected to rise slightly.
In the second half of the year, China’s domestic economic growth may slow down, and the central bank’s pressure to reduce corporate financing costs will increase. Market interest rates may gradually pull back, and interest rate bond yields will show a trend of high and low.
In the credit sector, as the default risk of credit bonds gradually converges, the bond financing environment will be effectively improved.
Wang Fang said that since 2020, a new round of information technology revolution and financial technology advancements represented by 5G, artificial intelligence, and digitalization are reshaping the global real economic system and promoting profound changes in the financial system.
In this context, as China's bond market reform and opening up further deepen, China's bond market is bound to undergo greater changes, and it will also play a greater role in promoting the development of China's real economy.
Xing Ziqiang, chief economist of Morgan Stanley China, believes that the pace of the global economy this year will show a simultaneous recovery, not just China outshining, but "the whole cake is bigger."
However, he also reminded that in the medium and long term, there may be "three goings", that is, de-globalization of trade, de-leading technology and de-corporating giants. Economic policies are more populist, which may change the situation of deflation in the past. This makes inflation face pressure to come back in the medium and long term.
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