A new strategy of 110 billion RMB bonds in May

category:Finance
 A new strategy of 110 billion RMB bonds in May


On the other hand, the regulations on the management of domestic securities and futures investment funds of overseas institutional investors, which was issued in early May, has begun to play a positive role, and is setting off a new wave of overseas institutions to increase their positions in RMB bonds.

Data shows that in May, the scale of national debt and administrative gold bond held by overseas institutions reached 1449.588 billion yuan and 361.37 billion yuan respectively, a significant increase of 54.781 billion yuan and 35.695 billion yuan on a month on month basis compared with April, both accounting for nearly 80.8% of the total amount of RMB bonds held by foreign investors in May.

Boris Schlossberg, head of macroeconomic research at bkasset management, said bluntly that with the U.S. dollar exchange rate falling due to the unlimited QE policy of the Federal Reserve, and the market expectation that the Federal Reserve will launch monetary easing measures to control the yield curve of treasury bonds (YCC) in June, resulting in further expansion of the interest rate gap between China and the United States, the demand for overseas capital positions in RMB bonds will continue to increase in the future The net increase in monthly positions will continue to hover around 100 billion yuan.

It is worth noting that the recent bear turn in the domestic bond market (bond prices have fallen but yields have risen) has just created a great opportunity for overseas capital to underwrite RMB bonds.

Three reasons for the increase of RMB bonds

Reporters have learned from many sides that the driving force for foreign investors to increase their positions in RMB bonds in May is quite different from that in April - if the reason for the increase in RMB bonds in April is that the easing of the US dollar shortage drives them to supplement their positions in RMB bonds, their subjective willingness to increase their positions in RMB bonds in May is stronger.

The head of the Asia Pacific region of the above-mentioned European bond investment institutions disclosed to reporters that after the Regulations on the administration of domestic securities and futures investment funds of overseas institutional investors (hereinafter referred to as the Regulations) was issued in May, it took only one week for them to quickly pass the decision to increase their positions in RMB bonds, because the relevant provisions of the regulations eliminated their flexible cross-border flow of funds and RMB Many concerns of exchange rate risk hedging operation.

Throughout may, we have increased our positions by almost 100 million yuan in treasury bonds. He told reporters. At present, they are considering to increase their positions in government bonds, because they find that the credit rating of government bonds is the same as that of government bonds, but the bond yield is 20-30 basis points higher than the latter.

We have also examined the allocation opportunities of Chinas credit bonds and urban investment bonds, but because they lack the ratings of international credit rating agencies, they cannot be included in our investment scope. He pointed out.

Boris Schlossberg believes that the reason why overseas capital increased its positions in RMB bonds in May is also the intention to copy the bottom. Since May, there has been widespread speculation that Chinas bond bull market may end, leading to the decline of the price of treasury bonds and the rise of the yield. The yield of 10-year Chinese treasury bonds has increased from 2.56% to 2.852%. For overseas passive investment institutions focusing on long-term holding and obtaining interest income, the purchase of 10-year Treasury bonds at this time will obtain about 29 basis points of additional income.

At the same time, RMB bond trading sentiment of overseas capital has become particularly active.

According to the latest data released by bondcom Co., Ltd., in May, there were 5824 transactions of bondcom with a total turnover of 468.2 billion yuan; the daily average turnover was 26 billion yuan, a new record.

Aaron Kohli revealed that behind this, many overseas actively managed investment institutions have adopted the trading spread arbitrage strategy, that is, they are in front of the bear in the domestic bond market (the bond price falls but the yield rises), sell the Treasury bonds and government bonds every time they are high, wait until the relevant bond price falls, and then buy them back, and at the same time get a lot of high selling and low buying income.

According to a US bond investment fund manager, the above-mentioned operation has brought them about 30 basis points of additional income. Considering the leverage ratio, the actual return on their high selling and low buying in May is about 120 basis points. At present, we still have a certain gap in the allocation of RMB bonds, and intend to make up for it when the price of treasury bonds continues to fall.

At the same time, many overseas investment institutions have taken a new approach to pay close attention to the investment opportunities of urban investment bonds and private enterprise credit bonds.

Recently, neeraj Seth, BlackRocks head of Asian credit bonds, said that in terms of Chinas credit bond investment, BlackRock preferred state-owned enterprise bonds in investment grade (Ig) bonds and real estate enterprise bonds in high-yield (HY) bonds. The U.S. bond investment hedge fund managers told 21st century economic news that they are paying close attention to the 2-3-year term high-yield urban investment bonds issued by urban investment companies in Chinas economically developed regions. Many urban investment bonds have a high yield (highlighting the markets concern about their repayment risk). Through the investigation and the related financial revenue and expenditure and refinancing ability assessment report provided by the third-party data institutions, we find that they are fully capable of realizing the repayment of principal and interest, which brings us additional investment returns. He analyzed to reporters. It is worth noting that as overseas capital increasingly pays attention to the investment opportunities of urban investment bonds and credit bonds, the trading volume of urban investment bonds of overseas capital in May reached 8.6 billion yuan, a year-on-year increase of 6.6 times. Source: Chen Hequn, editor in charge of 21st century economic report_ NB12679

Recently, neeraj Seth, BlackRocks head of Asian credit bonds, said that in terms of Chinas credit bond investment, BlackRock preferred state-owned enterprise bonds in investment grade (Ig) bonds and real estate enterprise bonds in high-yield (HY) bonds.

Many urban investment bonds have a high yield (highlighting the markets concern about their repayment risk). Through the investigation and the related financial revenue and expenditure and refinancing ability assessment report provided by the third-party data institutions, we find that they are fully capable of realizing the repayment of principal and interest, which brings us additional investment returns. He analyzed to reporters.