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Dragon in the bond market

Dragon in the bond market

The Chinese bond market got off to a solid begin in 2019, building on the sturdy momentum from last year that saw China buck the world trend to deliver positive returns to investors. This is a very good start for the Chinese economy. China’s bond and stock markets full-fledged record inflows of $120 billion last year and a furthermore than $200 billion may are available in this year. An official spokesman of U.S. bank very clearly stated that Inflows from various bonds and equities are likely to increase farther and that will to support China’s economic growth. Particularly, this factor will take care of the balance of payments. At the same time, financial markets in China will remain highly regulated compared to those of well precocious economies. This is an interesting option and will create more handsome opportunities for investors in China.

The Shanghai Stock Exchange (SSE) is very closely watching by Morgan Stanley Capital International (MSCI). However, Chinese A shares, also called domestic shares that denominated in Renminbi and listed within the Shanghai and Shenzhen stock exchanges were enclosed in the MSCI Emerging Markets Index for the first time last year, permitting investors to access the Chinese equity market more easy way. Now, Morgan Stanley Capital International ( MSCI) is considering whether to increase the weighting of A shares in its indexes further and could announce its decision by the end of this month. In addition to that, monetary data firm Bloomberg declared that Yuan denominated Chinese government and policy bank securities can soon be included in its bond benchmark (Bloomberg Barclays global aggregate Index). All these important factors will boost the weight of the Shanghai stock market while Chinese officials have kept a lid on what they think about potentially destabilizing capital outflows and mostly welcome inflows, that have increased following numerous arrangements which will allow foreign investors to buy domestic stocks and bonds through Hong Kong.

The possibility of reduced trade tensions between the US and China may also improve investor feelings as uncertainties surrounding Chinese investments are at ease. People will acknowledge that the trade war will be an “ongoing drawback,” Wan said, but he failed to expect anything “drastic” to happen. (Wan is a key person in international trade) This again is a positive indication for the Chinese economy for further growth. The potential for increased A share weighting has “sparked aggressive equity inflow” into Chinese markets through Hong Kong before MSCI’s decision later this month. Ken Cheung, Being a senior Asian foreign exchange expert at Japanese bank Mizuho in Hong Kong, expressed his valuable opinion. Chinese bonds will now make up 6 percent move of that index, which is good for Chinese Bond market and the stock market. All these various parameters have their own value and importance. Every parameter is important and will give a booster dose to the Chinese economy and the stock market.

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