Submission statement: China is liberalising debt and enabling foreign buyers to purchase Chinese debt. A big issue is the very low interest rates in mainland China.
>The moves come as historically low yields in mainland China have left Chinese institutional investors in pressing need of higher-yielding products to cover their liabilities. This has prompted a flood of Chinese capital into areas such as high-dividend bank stocks in Hong Kong. China’s benchmark 10-year government bond is trading at a yield of about 1.75 per cent. In comparison, the coupon on Goldman’s 10-year dim sum bond is 3 per cent.
Of course a major reason for China’s low interest rates is due to deflation.
>Economists said the rise in renminbi borrowing by big international banks showed China’s currency was taking over a role once played by the Japanese yen — a role diminished by sharply rising borrowing costs in Japan over the past two years. The offshore renminbi “has become a major funding currency for lack of a better option”, said Alicia García-Herrero, chief Asia-Pacific economist at Natixis. “The yen is just not what it used to be in terms of funding costs, especially at the longer end.”
Yuan swaps, anyone?
2Lore2Law on
Absolutely eating Japan’s lunch. That country is hurtling towards a cliff and I don’t know if there’s any turning around
So a big part of why the RMB hasn’t appreciated as much as expected is because of Chinese interventions between the CNY and USD, despite both Western and Chinese non-government financial entities both converting into CNY. As such, the CNY/USD exchange rate right now is around 6.8 rather than something like 6.5.
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Submission statement: China is liberalising debt and enabling foreign buyers to purchase Chinese debt. A big issue is the very low interest rates in mainland China.
>The moves come as historically low yields in mainland China have left Chinese institutional investors in pressing need of higher-yielding products to cover their liabilities. This has prompted a flood of Chinese capital into areas such as high-dividend bank stocks in Hong Kong. China’s benchmark 10-year government bond is trading at a yield of about 1.75 per cent. In comparison, the coupon on Goldman’s 10-year dim sum bond is 3 per cent.
https://preview.redd.it/l92m1am1t5yg1.jpeg?width=1400&format=pjpg&auto=webp&s=ec36c98666ae54faf6a5617580925a815e079a86
Of course a major reason for China’s low interest rates is due to deflation.
>Economists said the rise in renminbi borrowing by big international banks showed China’s currency was taking over a role once played by the Japanese yen — a role diminished by sharply rising borrowing costs in Japan over the past two years. The offshore renminbi “has become a major funding currency for lack of a better option”, said Alicia García-Herrero, chief Asia-Pacific economist at Natixis. “The yen is just not what it used to be in terms of funding costs, especially at the longer end.”
Yuan swaps, anyone?
Absolutely eating Japan’s lunch. That country is hurtling towards a cliff and I don’t know if there’s any turning around
https://preview.redd.it/wqcucv1gu5yg1.png?width=500&format=png&auto=webp&s=7169c5c877a00e4db4afcee111c5a9c079b2d2f6
So a big part of why the RMB hasn’t appreciated as much as expected is because of Chinese interventions between the CNY and USD, despite both Western and Chinese non-government financial entities both converting into CNY. As such, the CNY/USD exchange rate right now is around 6.8 rather than something like 6.5.