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China Government Bonds: The Case for the Un-Correlated.

Investing in China Government bonds presents continued diversification benefits.
HomepageAPACChinaMarketsStory
MNI (SYDNEY)
  • In recent months global bond market volatility has jumped, reflecting uncertainty around the Federal Reserve easing cycle and the US Election outcome, which delivered a red wave to the Republicans and may have strong implications for the fiscal/growth outlook in 2025.    
  • Global bond markets are correlated to the US bond market to varying degrees, China's market remains a clear outlier though in Asia.
  • Other factors that drive Asian bond markets and influence their returns (and therefore impact changes in correlations) are supply and demand factors.
  • Still, even with expectations of higher supply, China government bond yields have remained very resilient. PBoC policy actions have been supportive, particularly at a time of lower foreign ownership.
  • In a global context though, Investing in China Government bonds is very lowly correlated to US Treasuries and hence global bond market volatility thereby providing a diversified return strategy for global investors when building portfolios.
  • See the full piece here: 
    china bonds Nov 2024 (final).docx
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MNI (SYDNEY)
  • In recent months global bond market volatility has jumped, reflecting uncertainty around the Federal Reserve easing cycle and the US Election outcome, which delivered a red wave to the Republicans and may have strong implications for the fiscal/growth outlook in 2025.    
  • Global bond markets are correlated to the US bond market to varying degrees, China's market remains a clear outlier though in Asia.
  • Other factors that drive Asian bond markets and influence their returns (and therefore impact changes in correlations) are supply and demand factors.
  • Still, even with expectations of higher supply, China government bond yields have remained very resilient. PBoC policy actions have been supportive, particularly at a time of lower foreign ownership.
  • In a global context though, Investing in China Government bonds is very lowly correlated to US Treasuries and hence global bond market volatility thereby providing a diversified return strategy for global investors when building portfolios.
  • See the full piece here: 
    china bonds Nov 2024 (final).docx