Bullish China Bond Investors Debate How Far Rally Can Run
- Yuan debt seen appealing on high yields, low correlations
- Ten-year yield to drop further as PBOC keeps easing: UBS Asset
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Foreign investors are sticking with their bullish views on Chinese debt after Beijing’s dovish tilt, though most see the current rally as more-or-less done.
JPMorgan Asset Management, Fidelity International and Pictet Asset Management don’t see benchmark yields falling much further than 2.9%-3.0%, but see the bonds as attractive due to their low correlations with the rest of the world and premium to peers. UBS Asset Management is more bullish, saying China’s 10-year yield -- which has fallen to a 12-month low of 2.93% after Beijing’s shift toward monetary easing last week -- could drop as much as 100 basis points to a record if officials cut rates this year.