Foreign Investments in Chinese Bonds Decline for Fifth Month

Foreign investments in Chinese bonds decreased for the fifth month in a row in September, according to official figures released on Wednesday. This trend highlights the diminishing appeal of Chinese debt instruments.

At the end of the last month, overseas institutions held 3.78 trillion yuan ($530.68 billion) in bonds within China's interbank market, marking a 50 billion yuan drop from August, based on data from the central bank. The downturn in interest began in April, coinciding with a softening bond market, an increase in risk appetite, and a bullish stock market. Additionally, China's 30-year bond futures experienced a decline of over 2% in September, continuing a three-month losing streak.

In an attempt to boost foreign capital inflows and stabilize its currency, China has broadened foreign entry into its bond repurchase market, aiming to encourage an increase in yuan-denominated asset holdings. By the end of September, foreign ownership of China's interbank bonds was 2.2%, a decrease from 2.9% the previous year.