China: Foreign interest in bonds continued to pick up in July - ANZ

Foreign interest in Chinese bonds continued to pick up in July, in line with the increase in buying seen in June as this was likely on solid demand in the recently launched stock connect on 3 July, according to analysts at ANZ.

Key Quotes

“Roughly the entire USD5.6bn of inflows was in CGBs, while PFBs saw marginal outflows of USD0.1bn. With this, foreign ownership of CGBs rose to an all-time high of 4.26%. Equity inflows for July have not been reported yet, but ETF flows suggest that the strong inflows seen in Q2 likely extended into the start of Q3. No doubt the inflows were aided by China’s A shares’ inclusion in the MSCI announced in June. The inflows helped the yuan gain 0.8% against the USD in the month.”