Investors seek yield in China T-bonds

Added 12th August 2016

CSOP's five-year treasury bond index tracker has been gathering assets as the RMB appears to be stabilising versus the dollar.

Investors seek yield in China T-bonds

In July, CSOP’s China Five-Year Treasury Bond ETF had an RMB 670m net inflow, bringing its assets to around RMB 2bn ($301m), the firm said in a statement.

The ETF, which aims to track the ChinaBond 5-year Treasury Bond Index, has grown assets 16.9% since its launch in February 2014, according to the firm.

 “With the stabilisation of the RMB against the US dollar, devaluation pressure has eased to some extent. Moreover, the volatility in global capital markets has led to continuous capital inflows into emerging markets," said Alvin Li, ETF strategist in the firm’s ETF and index solutions group.

“Under the circumstances, the China treasury bond market has attracted large capital inflows because of its relatively higher yield and lower correlations with developed market bond markets.”

Five-year Chinese treasury yields are around 2.53%, which is considered high versus developed market counterparts.

China’s domestic investors have also been attracted to China’s interest rate bonds, Li added.

The firm believes that the investment interest in China’s treasury bonds will continue “given the lack of investable assets and the gradual stabilisation of the economy and its currency devaluation”.

CSOP recently launched two India-focused leveraged and inverse ETFs, FSA reported earlier.


The CSOP China Five-Year Treasury Bond ETF versus the China fixed income fund sector, rebalanced in US dollars, over the last 12 months.


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