China News Service, January 22. Wang Chunying, deputy director and spokesperson of the State Administration of Foreign Exchange, said on the 22nd that the 2020 bond market is a very important area for foreign capital inflows into my country.
According to the statistics of the State Administration of Foreign Exchange, the net increase in foreign holdings of domestic bonds in 2020 will be US$186.1 billion, and the year-end balance will reach US$512.2 billion.
On the morning of the 22nd, the State Council Information Office held a press conference on the data of foreign exchange receipts and payments in 2020.
At the meeting, a reporter asked: How do you evaluate the purchase of domestic bonds by foreign investors in 2020?
Is there a greater risk among them?
Regarding the issue of risks, Wang Chunying said, first, prudent investors such as foreign central banks are the main force holding domestic bonds.
In recent years, with the continuous advancement of the internationalization of the renminbi, the nature of the renminbi as an international reserve currency has improved, and the demand for foreign central banks to allocate renminbi bonds has continued to increase. Foreign central banks have always been the main force in increasing their holdings of domestic bonds.
In 2020, the net holdings of foreign central bank investors in domestic bonds were US$47.1 billion, and the average for the past five years was US$41.1 billion.
In terms of stock, as of the end of last year, foreign central bank investors held a balance of US$263.7 billion in domestic bonds, accounting for 51%.
Therefore, the proportion of prudent investors is more than half.
Second, foreign investment shows the characteristics of seeking stable returns.
Foreign investors pursue stable fixed income and mainly purchase low-risk bonds.
Last year, foreign capitals increased their holdings of my country’s national bonds by 93.6 billion U.S. dollars, and the year-end balance was 291 billion U.S. dollars; the net increased holdings of domestic bank bonds was 78.3 billion U.S. dollars, and the balance by the end of last year was 184.6 billion U.S. dollars. 93% of the amount.
In addition, foreign investment in the domestic bond market is relatively stable.
From January to November, the monthly transaction amount under Bond Connect was generally around RMB 400 billion, and there was no particularly large fluctuation following changes in the situation.
In addition, the proportion of foreign capital in China's bond market balance and transaction volume are both about 3%.
Third, China's medium and long-term economic development prospects are good, which is the main reason why foreign investors favor the domestic bond market.
In the context of the epidemic, China’s economic fundamentals were the first to be repaired, and monetary policy remained stable. my country’s bond yields were relatively prominent among major countries in the world, and RMB assets displayed certain hedging asset attributes globally. These are the most important factors in attracting foreign investment into the domestic bond market.
In addition, in recent years, the opening up of financial markets has entered the fast lane. Bonds have been included in major international indexes such as Bloomberg and Barclays. RMB assets in the form of bonds have become an important target for foreign investors' allocation.
The current period is a period of increased allocation of foreign capital to build warehouses, so we see that more foreign capital flows in, and it will enter a period of stable development in the future.
"From the previous aspects, China's financial market continues to open to the outside world, the bond market is still a relatively stable channel for foreign investment, and global investors also need to allocate RMB assets. In the future, we will continue to strengthen monitoring and continue to carry out structural analysis." Wang Chunying said.