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Foreigners jump into China’s bond market


TRIVIUM CHINA

Pan Gongsheng is the head of China’s foreign exchange administrator (SAFE), and he sat down for an interesting interview with Yicai.

Pan touted the progress regulators have made in opening the domestic bond market to foreign players. The key stat:

"By the end of July 2018, more than 1,000 foreign institutions had invested in the interbank bond market, with a debt holding of nearly RMB 1.7 trillion."

That’s up from just 400 foreign investors, holding RMB 800 billion, last year.

There are two big reasons that foreign investors are jumping in:The inclusion of Chinese bonds into various global indices has forced some money managers in.The market infrastructure is improving.

On the second score, Pan highlighted that bonds can now be settled with a method called delivery versus payment (DvP) – that allows for simultaneous transfer of a security's ownership upon payment.

It’s a big improvement, and brings China in line with international best practice, making foreign bond purchasers more comfortable.

Get smart: China is deepening and professionalizing its bond market, and it wants foreign players involved in the process. Over the past year, foreign investors have been increasingly happy to oblige.
 

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Yicai: 独家专访潘功胜:债市开放持续推进,投资环境更加便利友好

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