Overseas funds returned to selling China’s bonds in January after a one-month pause, underscoring the relatively unattractive yields on yuan-denominated debt as Beijing keeps monetary policy loose to support growth, reports Caixin.
Foreign holdings of Chinese onshore bonds in the interbank market including sovereigns, policy bank debt and other fixed-income securities slid by RMB 106.5 billion ($15.5 billion) to RMB 3.28 trillion, the lowest since 2020, according to Bloomberg calculations based on data from the China Central Depository & Clearing Co. and Shanghai Clearing House. That’s also the biggest outflow since May.
The figures had been highly anticipated since December’s data showed overseas investors added to holdings of China’s bonds after record outflows through most of last year. Global funds are looking to see how the nation’s debt and the yuan react to the country’s reopening from COVID-Zero and the outlook for monetary policy as the central bank seeks to bolster the recovery.