Bloomberg Poll Shows Investors in Hong Kong and Singapore Plan To Invest More in Onshore Chinese Bonds

More than a-third cited inclusion of Chinese bonds in global benchmark indices as a top reason for investing

Hong Kong, Singapore – A Bloomberg survey conducted among banking and investing professionals in Hong Kong and Singapore suggests that more market participants (67 percent) expect to invest in Chinese onshore bonds in 2019. Only eight percent of 180 respondents said they will sell their Chinese onshore bond holdings this year.

The survey was conducted at Bloomberg’s annual “China: Navigate the New Silk Road” events in Hong Kong and Singapore last week, where more than 180 market participants convened to discuss developments in China’s US$12 trillion bond market.

The top reason cited by respondents for increasing their investments in the onshore Chinese bond market was the inclusion of Chinese RMB-denominated government and policy bank securities in the Bloomberg Barclays Global Aggregate Index starting April 2019, phased in over a 20-month period. Investors also recognized the low correlation Chinese onshore bonds have with developed markets, citing portfolio diversification as another top reason for investing.

“2019 is going to be a tipping point for China’s bond market,” said Bing Li, Head of China for Bloomberg. “This is primarily driven by four factors that contribute to an investable bond market – ongoing policy driven regulation, market access, investor demand and benchmarks. The upcoming index inclusion in April, which is a real vote of confidence for investors, is arguably the biggest development in China’s bond market since its inception.”

In terms of concerns investing in the world’s third largest bond market, the most cited reason was credit risk (27 percent) and liquidity issues (21 percent). Participants in Singapore (28 percent) were more concerned with operational issues such as trading hours, taxation, language when accessing the onshore market, citing this as the second top reason.

Meijing Li, Deputy General Manager, RMB Market Department, CFETS, said: “We will continue to work on reforms to consistently and systematically open up China’s bond markets and offer more trading and hedging instruments, so that global investors can be more confident in investing in China’s bond market.”

Bloomberg recently launched new access channels for China’s bond market via CIBM Direct as well as Bond Connect, the two most popular schemes used by offshore China investors. The first trades on Bloomberg channels took place on February 21 and 22, 2019. ICBC Ltd Singapore Branch and LUSO International Banking Co., Ltd, used Bloomberg CIBM Direct function to complete three interbank deposit receipt transactions with their onshore agent banks ICBC and Bank of China respectively. Bank of China (BOC) HK Branch and Bank of China (Hong Kong) Limited were the first overseas institutions to complete the first trades via Bloomberg Bond Connect and both traded with the onshore dealer Bank of China.

In addition to providing global benchmark indices and market access channels, Bloomberg has built a number of sophisticated tools to help investors make informed decisions. With RMB Bond Solutions, investors can analyze the China bond market with a set of tools around critical fixed income data, real time curves and economic indicators. Bloomberg’s trade order management solution or TOMS allows market makers to provide pricing information on the Bloomberg Terminal, providing transparency to global investors.

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Media contacts:
Hong Kong, Robert Koh, +852 2977 2101, rkoh22@bloomberg.net
Singapore, Grace Ngoh, +65 6231 3690, gngoh2@bloomberg.net