China Set to Unleash Funds Abroad as Bond Link Opening Nears
- Foreign holdings of Chinese sovereign bonds almost triple
- Chinese investors set to gain broader access to offshore debt
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In 2017, China’s launch of a debt-trading link to the rest of the world started with a whimper. Four years later, global investors are clamoring to get their hands on the country’s bonds and Beijing is opening the door wider for its traders to return the favor.
Thanks in part to attractive yields and low correlations to other markets, global funds have nearly tripled their holdings of Chinese sovereign debt to more than 10% just a few years after the Bond Connect program began with tepid interest. Its success bodes well for the expected launch of a southbound link, which will allow Chinese investors to purchase offshore bonds.