China International Bond Investor Forum 2017 Notes

I attended the China International Bond Investor Forum on October 26th, 2017 in Tsuen Wan, Hong Kong, and despite its remote location, was suprised it was so lightly attended (maybe 50 total, with over half the seats empty) given the size and importance of the Chinese bond market.  The main takeaways include:

  1. The China bond market is now the 3rd largest in the world, behind the US and Japan
  2. Over 99% of the China bond market is onshore, with offshore “Dim Sum bond” and “Lion City bond” markets remaining relatively tiny
  3. Foreign investors make up only 2% of China’s bond market, as opposed to over 20% for many other countries

I earlier wrote an article on the US-listed DSUM ETF for accessing Chinese Yuan RMB-denominated bonds (as opposed to US-listed “CBON“, which tracks onshore bonds, but still has less than US$5mio in AUM) for US-based investors, though I expect Hong Kong to be the main international hub for onshore China bond ETFs for the forseeable future (I earlier posted a list of Hong Kong listed ETFs here), at least until A-share versions of onshore bond ETFs become available through stock connect.  Bond connect still seems enticing, but is not as easy or accessible for most foreign investors as stock connect.

 

China's bond market is now the 3rd largest in the world

99% of China Bond activity is onshore

Foreign investors still make up only 2% of investment in China bonds

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