Foreign investment institutions significantly reduce their holdings of Chinese government bonds for the first time in more than two years

Foreign investment institutions significantly reduced their holdings of Chinese government bonds by 16.5 billion yuan in March, a move that marked the first time since February 2019 that overseas investment institutions have reduced the size of their holdings, Reuters reported on April 7.

The report said foreign investors’ enthusiasm for buying Chinese bonds was finally affected and cooled significantly as the interest rate differential between China and the U.S. narrowed further. The latest statistics from the China Foreign Exchange Trade Center show that foreign institutional investors bought a net 51.4 billion yuan of bonds in March in the interbank bond market. This scale is more than 60% lower than the previous month, and even less than 20% in January this year.

Reuters also calculated according to the latest data from the China Bond Exchange, the balance of foreign institutional investors in the custody of government bonds in February was 2,060.5 billion yuan, but the balance of the custody of government bonds at the end of March fell to 204.4 billion yuan.