As we move into 2018, we’re reflecting on air miles clocked up and numerous client meetings all over the world in 2017.
Importantly, we’re evolving our understanding of how China’s new five-year plan will impact the macro outlook of the world for the foreseeable future.
Our clients have asked the same questions repeatedly on China’s bond market opening up; hence we will focus on highlighting the opportunities for the year ahead.
Are onshore bonds freely tradeable?
Yes. Access has changed during the past year and institutional investors have unlimited access to China’s markets. This marks a major change from 2016, when free access was limited to sovereign wealth funds and central banks. You no longer need to apply for quotas.
The Bond Connect, started in July 2017, offers an alternative for smaller investors to invest in China’s onshore bond market, and marks the latest stage of China’s integration with global financial markets.
Will the RMB internationalize any time soon?
Yes, the inclusion of the Renminbi (RMB) in the IMF's SDR basket from September 2016 was a milestone development. Additionally, reforms to the domestic money market, opening of the stock and bond markets through the Connect programs, introduction of a RMB-denominated international payments system, expansion of Free Trade Zones across China, new overseas centers for RMB clearing, and new currency swap agreements, show RMB internationalization is progressing.
Download the full report for further insights, including our view on China's economy and bond markets in 2018.