Investor Presentaiton
Small Number of Foreign Investors
Interbank Traded Bonds
-90%
Bond under Custody - RMB 41 trillion
Spot Bonds
~13%
Spot bond trading at ~RMB 53 trillion
Bonds held by Foreigners
~1.7%
Total foreigners holding bonds - RMB 0.68 trillion
Source: CCDC
ΑΛΛ
As of August 2016, -90% of China onshore bonds under custody are in
CIBM. Stock Exchanges + Counter only accounted for ~10%.
As of August 2016, most foreign investors could only invest in spot bonds in
CIBM, which is 13.37% of total CIBM trading volume. Most transactions
(~87%) are from credit lending and repo.
As of August 2016, foreign holdings of China domestic bonds were
~RMB 686 billion or 1.66% of the market. Domestic commercial banks
dominate trading activity in CIBM with -60% market share.
Growth in Foreign Investor Access
Who is already in ?
No. of Foreign Institutional Investors allowed access to bond
market as of August 2016
What are they investing in?
May 2016, in RMB billion
Spot Bonds
Government Bond
296
349
Policy Bank Bonds
201
305
Mid Term Notes
28
Enterprise Bond
17
400
350
300
250
211
200
150
138
100
100
50
51
0+
2011
2012
2013
2014
2015 August
2016
Commercial Bonds 1
Others
Credit Lending 0%, but expected to be growing as
Repo
PBOC started to allowed certain
foreign investors to invest in those
Derivatives instruments.
What are the trends?
• Ease of market access requirements for foreign
investors by gradually changing current approval
process into filing process
Foreign investors could invest in other
instruments in CIBM other than spot bonds
• The expected bond connect and the inclusion of
RMB in the SDR basket should bring in fresh
demand from foreign investors for RMB
denominated assets
• Considering the rising nominal GDP, doubling
the ratio of bond market cap/GDP ratio in the
next decade could quadruple the size of the
bond market
Sources: CCDC, CFETS, SHCH
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