[The Epoch Times, May 20, 2022](Comprehensive report by The Epoch Times reporter Li Yan) In the first four months of 2022, internationalinvestInvestors sold 35 billion worth ofDollarofRMBbond.The impact of the COVID-19 (CCP virus, new corona virus) lockdownRMBAs U.S. yields rise,investPeople have further lost interest in Chinese bonds.
According to the Financial Times based in Hong KongbondForeign investors sold more than 108 billion yuan worth (16 billion yuan) in April, according to data from China’s investment planDollar), bringing net outflows from the yuan-denominated bond market to a record 235 billion so far this year and the third straight month of net sales.
Under the CCP’s COVID-19 zero-clearing policy, many parts of China, led by the financial center Shanghai, entered a state of continuous lockdown, raising concerns about China’s economic prospects. The yuan has fallen nearly 5 percent against the dollar this year.
A weaker yuan reduces the value of interest and principal payments to foreign holders of Chinese bonds. Meanwhile, soaring interest rates in developed markets, especially the U.S., have eroded some of the advantages Chinese bonds may have.
Over the years, the ultra-easy monetary policy of Western central banks has depressed yields in developed markets, and overseas investors have often turned to Chinese bonds for higher fixed-income returns. However, the U.S. Federal Reserve vowed to raise interest rates this year and address inflation, pushing up U.S. Treasury yields.
Strategists and analysts said long-term investors and speculators such as hedge funds have accelerated cashing out of yuan-denominated bonds since the yuan began to fall against the dollar last month.
“We do see some cash investors reduce their excess positions in Chinese bonds.” Becky Liu, head of China macro strategy at Standard Chartered Bank, said the remainder of the second quarter and the third quarter are expected to continue to see outflows .
The yuan fell sharply against the U.S. dollar in April after months of stabilization, and the recent weakness has made it harder to hold yuan-denominated assets because foreign-exchange hedging is “complex and costly,” said analysts at Beijing-based consultancy Gavekal Dragonomics. high”.
“Even if there is no more room for the yuan to fall in the short term, investors may need to factor in greater risks from future currency fluctuations,” they added.
Chinese officials downplayed the long-term economic impact of the coronavirus lockdown, saying this week that government restrictions on Shanghai were being lifted. But Goldman Sachs analysts on Wednesday cut their forecast for China’s annual economic growth to 4 percent from 4.5 percent.
“Even this lower growth forecast incorporates an assumption that COVID-19 is contained for most of the future, the housing market starts to improve from here, and the government provides substantial policy relief through infrastructure spending in the coming months. sales,” the Goldman Sachs analyst added.
Responsible editor: Li Yuan#