China seeks more foreign investment in its bonds, stocks

BEIJING • China aims to attract more foreign investment in its bonds and stocks as the country further opens up its capital markets, the foreign exchange regulator said yesterday.

There is significant room for foreign investors to buy Chinese bonds and stocks given their holdings of such instruments accounted for just 2 to 3 per cent of the total, Ms Wang Chunying, spokesman for the State Administration of Foreign Exchange (Safe), said in a news conference.

"China will become an important destination of diversified asset allocation for global investors in the future, under the policy of further opening up and facilitation," Ms Wang said.

Overseas institutions bought a net US$9.5 billion (S$12.9 billion) in Chinese bonds and a net US$19.4 billion in listed Chinese stocks in the first quarter of this year, she said.

Ms Wang also said China will improve channels for opening up its interbank bond market and develop the panda bond market.

Commenting on the US Federal Reserve's policy stance, she said it will be favourable for the nation's capital flows, and she expects the cross-border capital flows to remain steady despite some uncertainties. The Fed recently called a halt to further rate hikes over this year in the face of rising global economic risks, in turn putting a dent on the US dollar.

Ms Wang said China will ensure safety of its forex reserves, reaffirming a pledge to improve the yuan regime as well as the flexibility of trading in the currency.

Chinese commercial banks sold a net US$9.1 billion of foreign exchange in the first quarter, the regulator said, adding that the nation's current account is likely to maintain a surplus in the first quarter of the year.

China's cross-border capital flows are expected to remain steady this year, helped by the government's growth-supportive policies, Ms Wang said.

China's economy grew at a steady 6.4 per cent pace in the first quarter, defying expectations of a further slowdown, as industrial production jumped sharply and consumer demand showed signs of improvement.

China reported a current account surplus of US$49.1 billion in 2018, Safe data showed last month.

The Organisation for Economic Cooperation and Development said in a report on Tuesday that China's current account may swing to a deficit of 0.1 per cent of GDP this year from a small surplus last year, amid its rebalancing towards domestic demand.


A version of this article appeared in the print edition of The Straits Times on April 19, 2019, with the headline 'China seeks more foreign investment in its bonds, stocks'. Print Edition | Subscribe