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China fixed income: Investing in resilience

Ming Leap, Portfolio Manager, Asian Fixed Income, shares his views on the drivers and investment opportunities in the Chinese bond market
24 June 2020
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    Summary

    • On a macro level, China has announced an array of fiscal stimulus to spur economic growth, while launching targeted measures to offset the damage of virus outbreak on employment and small businesses
    • On the back of low yields globally, foreign investors purchased USD16 billion of onshore Chinese bonds in May, the largest monthly inflow on the record
    • In the offshore USD China credit market, a reduction in supply of bonds is likely to provide technical support for outstanding dollar bonds
    • After the index inclusions by Bloomberg and JP Morgan, FTSE Russell could announce its decision on including China bonds in its World Government Bond Index (WGBI) in third quarter of 2020
    • Looking ahead, China is set to further open up its domestic financial market to offshore investors, raise its governance standard to international level