Evolving opportunities in China's fixed income market
Held in Singapore in June 2025, our Invest in Asia Series: Spotlight on China event focused on the theme of the continued opening and maturation of China's bond market, now the world's second largest. Reforms have delivered deeper interest rate liberalization, more robust price discovery, and expanded access for global investors through initiatives like Bond Connect and Swap Connect. The market now offers international participants a level of transparency, efficiency, and liquidity that stands up well in comparison with both developed and emerging market peers.
Speakers highlighted the following
Stability and low correlation: Chinese government bonds have shown robust stability, with low correlation to both U.S. Treasuries and other major bond markets making them attractive for diversification in global portfolios.
Liquidity and access: Trading volumes and turnover have grown rapidly since the launch of Bond Connect in 2017. Liquidity in government and policy bank bonds is strong, and mechanisms for repatriation and hedging (such as Swap Connect) are in place, though some instruments remain restricted for foreign investors.
Product choices: For institutional investors, the market offers choices ranging from government bonds (CGBs) to policy bank bonds and local government debt. Most recent foreign inflows have targeted short-duration products such as negotiable certificates of deposit (NCDs), but there is steady growth in interest for longer-term bonds and more complex fixed income strategies.
Ongoing reforms: There is ongoing regulatory engagement to address remaining friction, particularly around access schemes, taxation, repo market connectivity, and the hoped-for opening of CGB futures to a broader group of foreign investors.
Market outlook and practical takeaways
Economic outlook
While China's near-term growth remains solid by global standards, there are realistic headwinds. Export growth has been front-loaded and is expected to moderate; domestic consumption still has significant untapped potential, but policy stimulus will be required to unlock it. Property sector weakness and local government debt are not resolved. That said, China's global contribution to GDP growth is set to remain substantial, with innovation, technology, and services expected to play an expanding role.
Bond market strategy
Diversification and risk management: China's bond market offers a clear diversification benefit due to its low correlation with other global markets and overall stability, even amid global volatility.
Liquidity and execution: For investors focused on size and scale, the main tenors of government and policy bank bonds are highly liquid and increasingly accessible through international platforms.
Access and hedging tools: Bond Connect, Swap Connect, and related initiatives are steadily making entry and risk management more practical, though further progress on futures and tax clarity would be welcomed by international players.
Policy and infrastructure evolution: Regulatory authorities and market infrastructure providers are responsive to investor feedback, with a clear pipeline of enhancements in settlement, trading hours, and derivative instruments.
Conclusion
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
39 minutes ago
- Yahoo
Fact File: No truth to online claims of dramatic drop in potato exports to U.S.
While Canadians wait for news of an improved trade situation with the United States, false reports about quiet deals with other countries have begun to fill the void. Recently, unfounded claims have spread online that Canada has slashed potato exports to the United States in response to tariffs, and struck a $1.6 billion trade deal with "Asian markets." THE CLAIM "Canada Cuts Potato Exports to U.S. – PM Carney signs $1.6B deal with Asia," reads an Aug. 6 post on the X platform, formerly X platform, formerly known as Twitter. "In just four months, over 140,000 tons of Canadian potatoes have disappeared from U.S. shelves." The claims were shared on Facebook, Threads and TikTok, the last of which tied a supposed 41 per cent drop in exports to the United States to 35 per cent tariffs placed on Canadian potatoes by Washington. Multiple YouTube channels shared the claims in videos (archived video) stylized as news reports, racking up hundreds of thousands of views. THE FACTS There is no evidence of a recent $1.6 billion deal with any Asian country or of increased potato exports to markets in Asia. "Canadian agri-food exporters base their decisions on market needs and dynamics, and available data for 2025 does not show an overall increase in shipments to Asian markets," Agriculture and Agri-Food Canada spokeswoman Stéphanie Blais told The Canadian Press in a statement. Canada has been in talks for a free trade deal with the Association of South East Asian Nations (ASEAN), a 10-member bloc that includes Indonesia and the Philippines, since 2021, but negotiations are ongoing. Several of the YouTube videos mention Indonesia and the Philippines as new destinations for Canadian potatoes. In December, a delegation of P.E.I. potato growers visited the countries in a bid to expand exports to the region, a report from P.E.I.-based agriculture publication Island Farmer says. The trip came as Canada finished negotiations on the Comprehensive Economic Partnership Agreement with Indonesia, with the pact set to be signed some time this year. There is no dollar figure attached to the deal, but in its statement about the completed negotiations in November, the Prime Minister's Office noted merchandise trade between the two countries totalled $5.1 billion in 2023. Indonesia's only imports of Canadian potatoes in 2025 came in April, with Statistics Canada data recording 980 tonnes of fresh or chilled spuds sent to the country. NO BIG CUTS TO U.S. EXPORTS The United States is the largest market for Canadian-grown potatoes, representing 96 per cent for seed, 93 per cent for fresh and 91 per cent for French fry exports in the 2023/2024 production year, which runs from Aug. 1 to July 31, according to a report from Agriculture and Agri-Food Canada. Blais from Agriculture and Agri-Food Canada said that while exports to the United States decreased between the first and second quarters of 2025, that's happened in previous years when tariffs were not in place. "Fluctuation in trade occurs for various reasons. More time is needed to understand the true impact of the U.S. administration's tariff policy," Blais said. This year, Canada exported 427,467 tonnes of potatoes, in all varieties, to the United States from April to June, according to a Canadian Press analysis of Statistics Canada data. That compares with 512,621 tonnes from January to March, a difference of 85,154 tonnes. That represents a 17 per cent drop in exports, not the 41 per cent claimed in some social media posts. Potato exports are covered by Canada-U.S.-Mexico Agreement, or CUSMA, and so long as they meet the deal's rules of origin, do not face the 35 per cent tariffs imposed by U.S. President Donald Trump on Aug. 1. CLICKBAIT VIDEOS A Google search for "US tariffs on potatoes" brought up dozens of clickbait videos promoting the same story from channels ranging from the vaguely legitimate-sounding "Economic info" to the dubious "Bitcoin Timez." What appears to be the oldest version comes from a channel called U.S. Retail Check, published July 27. The video comes with a disclaimer that the makers "do not guarantee complete accuracy, nor do we claim to provide official, exhaustive, or professional advice." It also features a warning that the video contains "altered or synthetic content." The Canadian Press has previously debunked similar fake reports, generated with the help of artificial intelligence, of a trade deal being struck with Mexico. This report by The Canadian Press was first published Aug. 14, 2025. Colleen Hale-Hodgson, The Canadian Press Sign in to access your portfolio
Yahoo
43 minutes ago
- Yahoo
JD.com's Investments Pay Off With Massive Jump In New Business Revenue
China-based (NASDAQ: JD) reported fiscal second-quarter results on Thursday. The company reported a quarterly revenue growth of 22.4% year-over-year (Y/Y) to $49.8 billion, beating the analyst consensus estimate of $46.9 billion. JD posted an adjusted net income per ADS of 69 cents, beating the analyst consensus estimate of 44 net product revenue increased by 20.7% Y/Y at $39.42 billion. Net service revenues rose 29.1% Y/Y to $10.36 billion. JD Retail revenue climbed 20.6% Y/Y to $43.3 billion, Logistics revenue gained 16.6% Y/Y to $7.2 billion, and the new business revenues grew 198.8% Y/Y to $1.9 billion. marketing expenses rose 127.6% to $3.8 billion in the quarter, forming 7.6% of revenues, up by 350 bps. Operating margin loss was (0.2)% for the quarter, compared to 3.6% Y/Y. Adjusted operating margin stood at 0.3% compared to 4.0% Y/Y, primarily attributable to increased strategic investment in new business initiatives. View more earnings on JD JD Retail's operating margin rose 60 bps to 4.5%. Adjusted EBITDA decreased 77.8% Y/Y to $419 million, with a 0.8% margin, compared to 4.6% Y/Y. generated $3.07 billion in free cash flow for the quarter and $3.41 billion in operating cash flow. The company held $31.2 billion in cash and equivalents as of June 30, 2025. CEO Sandy Xu attributed its second-quarter growth to strong momentum in its core JD Retail business and New Businesses, particularly JD Food Delivery. Xu pointed to gains in user traffic, active customers, and shopping frequency, noting that JD Food Delivery advanced in order volume, merchant base, and rider recruitment, supported by synergies with JD's broader retail ecosystem. She said the company will keep its core retail segment as a foundation while investing in strategic growth areas to enhance user experience, cut costs, and improve efficiency. stock declined over 6% year-to-date as investors remain wary of its food delivery business profitability. Price Action: JD stock is trading higher by 0.34% to $32.62 at last check Thursday. Photo by Freer via Shutterstock Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? (JD): Free Stock Analysis Report This article Investments Pay Off With Massive Jump In New Business Revenue originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
Yahoo
an hour ago
- Yahoo
China Tempers Nvidia H20 Use -- No Ban, But Heavy Scrutiny
Chinese regulators are signaling caution but not an outright ban on Nvidia's (NASDAQ:NVDA) H20 AI chip. Reuters reports the Cyberspace Administration of China and other agencies recently called in Tencent (TCEHY), ByteDance, Baidu (NASDAQ:BIDU), and others, pressing them to justify why they need the U.S.-made chips instead of local options, while voicing worries that data shared for U.S. export clearance could expose sensitive client information. Warning! GuruFocus has detected 5 Warning Signs with NVDA. The companies haven't been ordered to stop buying, pushing back on earlier reports of a ban. Still, Bloomberg says officials advised against using H20 chips in government-linked projects, and The Information claimed some firms were told to pause purchases though Reuters couldn't confirm that. The distinction is key for Nvidia, which only regained the right to sell the H20 in China last month after U.S. curbs eased. The chip was custom-built for China after 2023 restrictions and delivered $17 billion in China sales last fiscal year, 13% of Nvidia's total. Yet the pressure comes as Huawei and others ramp up domestic AI chip efforts, and Beijing pushes its tech giants to cut reliance on U.S. suppliers. This article first appeared on GuruFocus. Sign in to access your portfolio
