China’s bond market is becoming the locus for global capital outflows and there are signs the government is growing concerned about the $30 billion exodus as it delays data and seeks to manage investor expectations, reports Bloomberg.
Foreign funds offloaded RMB 55.9 billion ($8.3 billion) of the nation’s debt in June, a fifth month of net sales that swelled the total outflows this year to RMB 200 billion. That’s an abrupt reversal for a market that had seen global participation grow every year since 2014, when Bloomberg started compiling data based on official figures.
In one way, the outflows aren’t surprising as they come after aggressive Federal Reserve rate hikes caused the premium offered by China’s bond yields over Treasuries to become a discount. Yet, the exodus is a concern given it’s taking place at a sensitive time before a key leadership summit this year, and coincides with an escalating economic and property-market crisis.
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