Global investors’ search for alternatives to US-dollar assets is driving more capital into China’s domestic bond market, according to UBS.
A new wave of increased allocations to the Chinese bond market had just begun and was expected to continue if the trend of de-dollarisation continued, said Raymond Gui, Asia head of fixed-income portfolio management in the Swiss bank’s asset-management arm. UBS launched its first yuan-denominated bond fund in 2018.
Foreign investors, mostly institutional investors including central banks, insurance companies and pension funds, held US$587 billion in yuan-denominated Chinese bonds as of the end of May, rebounding from a low of US$429 billion in March 2023. The holdings are down about 6 per cent from a peak in January 2022.
The Chinese bond market, at US$25 trillion, remains the world’s second largest after the US. Foreign holdings, accounting for about 2.3 per cent of the market, are mainly…
