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China is opening the door to its public debt market for private investors, to reach 33.5 billion rubles, with the aim of deepening its financial markets while stimulating the sale of bonds that fuel the market. economic rebound of the country this year.
The finance ministry announced Monday that it would extend the period during which individual investors can buy 10-day savings bonds to April.
This decision comes as the country seeks to give Chinese citizens more options for investing their savings, following the crackdown by the government last year on the explosive growth of Chinese consumer products. wealth management.
"The sale of Chinese government savings bonds to retail investors for the entire month of April will help meet the demand for retail investment safe haven," said Liu Linan, macroeconomic strategist for China at Deutsche Bank.
The expansion of retail investment in government savings bonds is part of a larger effort by the authorities to expand and diversify the public debt market.
In March, China launched its first pilot project allowing individual investors to buy local and regional government bonds, a 19 million ruble ($ 2.8 billion) market that, until this year, was reserved for institutional investors.
The lawsuit began in late March and involved guarantees from four provinces – Zhejiang, Sichuan, Shaanxi and Shandong – and the cities of Beijing and Ningbo. The final sale of bonds for the pilot project took place in Beijing on April 3 and preliminary reports indicate that there was a strong demand for instruments, which can be purchased without an intermediary.
"Allow retailers access to [regional and local government] Bonds will help diversify the investor base, "wrote Amanda Du, an badyst at Moody's.
The biggest investors in these bonds are "by far" commercial banks, which hold about 85 percent, Ms. Du wrote. She added that this contrasted with the bond markets of more established local governments such as those of the United States, Canada or Europe, where the holders are more diversified, noting that states United States, individuals are the largest holders of municipal bonds.
Moody's expects the pilot program for retail investors to extend to all local government bonds by 2020.
Local government bonds helped boost China's economic rebound in early 2019.
The main source of growth for March was the construction of infrastructure projects, driven by a rapid acceleration of public debt issuance in the first two months of the year. Gross local bond issues reached RMB 782.1 billion (US $ 116.5 billion) in January and February this year, compared with RMB 28.5 billion in the first two months of 2018.
Ordinary investors in China have struggled to find the right investments outside the stock market and real estate sector.
Over the last decade, wealth management products sold by banks and insurance companies have become a destination of choice for retail liquidity. However, rising risks have forced regulators to dampen the growth of this market, a decision that led to the first slowdown of the shadow banking sector in a decade.
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