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One Government Bond Market the Rally Didn’t Reach

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Heard on the Street: There are good reasons to expect the Chinese government bond market to provide returns in the long term, and diversification in the short term

By Mike Bird Close Mike Bird Updated June 17, 2020 5:54 am ET Even as relations between the U.S. and China deteriorate, threatening economic ties, there’s still a long-term opportunity for American investors in the country’s government bond market.

Very much unlike Japanese and German government bonds, however, none of the Chinese sovereign bond market trades in negative territory. Its 10-year government bonds offer a yield of 2.89%. And there are good reasons to expect them to provide returns in years to come for buy-and-hold investors. For one, China’s demographics are unusual for an upper-middle income country. A rising share of elderly citizens tends to depress economic growth, while high savings for retirement reduces interest rates. The central government seems averse to a sustained fiscal push to aid consumer demand.

There are a couple of important caveats to this argument. The first is the rapidly expanding supply of formal government debt itself: year-to-date Chinese local governments, which enjoy implicit support from Beijing, issued more than 1 trillion yuan in special bonds in May, a record amount. The other risk is big problems in China’s copious off-balance-sheet local government debt, forcing the sovereign to absorb it in some way.

 

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sovereign bonds still paying out 4.2% to domestic investors.

धोखेबाज चीन के खिलाफ सख्त कार्रवाई हो। अक्साई चीन वापस लिया जाए। भारत अपना शक्ति प्रदर्शन करें।

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Stop supporting genocide in China.

班上作文第一的好孩子，就因為點補課費被老師逼上絕路，這種老師太可恨了

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I would recommend that anyone in the bond market stay very clear of the Chinese market

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