China Opens Bond Market to Foreigners as Outflows Hurt Yuan
- Investment quotas scrapped for interbank debt market
- Move is `a real game changer,' Standard Chartered says
China took a major step toward giving foreigners free access to the world’s third-largest bond market as it tears down restrictions on capital inflows to counter a cash exodus that’s driven the yuan to a five-year low.
The People’s Bank of China said in a statement on its website Wednesday that most types of overseas financial institutions will no longer require quotas to invest in the interbank bond market, which accounts for the bulk of debt in the nation. Commercial lenders, insurance companies, securities firms and asset managers were included on a list of those eligible and the authority said it also hopes to attract long-term investors such as pension funds and charities. Hedge funds were not included, while foreign central banks and sovereign wealth funds won access in June.