The popularity of RMB bonds shows "China's gravity"
Yao Jin
Recently, statistics related to Bond Connect show that at the end of January 2022, foreign institutions increased their holdings of domestic RMB bonds by 66.3 billion yuan to 4.07 trillion yuan, an increase for 10 consecutive months.
This means that after breaking the 4 trillion yuan mark at the end of last year, the pace of foreign institutions increasing their holdings of RMB bonds has not stopped.
Correspondingly, in January this year, 6 new foreign institutions entered the inter-bank bond market; as of the end of January, a total of 1,021 foreign institutions entered the market.
Foreign investors continue to "bull" RMB bonds, demonstrating "China's gravitational pull", including factors such as my country's economic recovery, the continuous opening of the bond market, the relatively high returns on RMB assets, and the gradual enhancement of risk-averse attributes.
First, in the face of the complex international situation, RMB assets have become an important option for global investors to diversify investment risks.
On the one hand, the domestic new crown pneumonia epidemic has been well controlled, the economy has recovered steadily, and the renminbi assets have become a "safe haven", which has been recognized by international investors; on the other hand, in response to the impact of the epidemic, major global economies have implemented large-scale China has adhered to the normal macroeconomic policy, and the RMB government bonds and policy financial bonds have maintained positive returns, making up for the lack of global safe assets.
Under the circumstance of great turbulence in the international financial market, due to the prudent monetary policy implemented by my country, the RMB exchange rate has remained basically stable.
The data shows that among the 973 trading days in my country's foreign exchange market from 2018 to 2021, the central parity rate of the RMB against the US dollar appreciated on 485 trading days, depreciated on 487 trading days, and remained flat on one trading day, fully reflecting the two-way floating. feature.
A stable exchange rate not only reflects the stability of the value of the RMB, but also acts as a "ballast stone" for the safety of RMB assets, and also contributes to stabilizing the economic and financial operations in Asia and the world.
Secondly, the opening of my country's financial market has moved towards a higher level, which has been widely recognized and affirmed by international institutions, and has also significantly accelerated the pace of foreign capital entering China.
In recent years, policies and measures to open the bond market to the outside world have been continuously introduced, providing a more convenient investment environment for international investors and driving overseas institutions to increase their holdings of RMB bonds.
China's bond market has developed into the world's second largest bond market, with rich varieties, complete trading tools, safe and efficient infrastructure, and considerable depth and breadth.
The continuous increase in holdings highlights the continuity and stability of overseas institutions' investment in Chinese bonds, which reflects the long-term trend of global investors increasing their positions in China and allocating more RMB assets.
Next, China's bond market needs to continue to accelerate the pace of opening up, and there is still room for a substantial increase in the proportion of foreign capital in China's bond market.
In addition, the current structure of foreign-owned RMB bonds is relatively simple. Among them, treasury bonds and policy financial bonds account for 68% and 29%, respectively. There is still a lot of room for development of corporate and corporate credit bonds.
With the continuous opening of China's bond market, bonds may become an important front for attracting foreign investment in China's financial market.
In the future, with the further development and improvement of the bond market, the continuous enrichment of various bond products, and the continuous integration of relevant legal systems with the international market, it is expected to attract more passive and active allocation capital inflows.
By investing in RMB assets such as RMB bonds, international investors will also better share the dividends of China's economic development.