19 July 2019

Rate liberalization to boost China bond market, SWS says

China’s bond market is expected to become more mature next year amid the liberalization of the country’s interest rates, SWS Research Co. Ltd. said.

“The bond market in the country has already been driven by the market but its size remains small,” chief economist Li Huiyong told a press conference on Monday. “It is expected to become more mature by 2015, keeping pace with the rate liberalization.”

Li also expects the interbank bond market to merge with the bond market in the exchanges by the second half, and their “fragmented supervision will be combined as well by this year”.

Regulators are likely to issue new regulations for the bond market, such as a “negative list”, as part of efforts to streamline administrative approvals. And that is how the bond market will get mature, he said.

Li expects the bond market to grow to between 14 trillion yuan (US$2.25 trillion) and 15 trillion yuan this year, from 9 trillion yuan in 2013, as more companies turn to bonds for financing amid a government crackdown on shadow banking and reform of the equities market.

On the renminbi, Li said the Chinese currency will continue to face depreciation pressure in the second quarter after losing almost 3 percent of its value in the first three months.

However, by the end of this year, the renminbi is expected to post a 2 percent appreciation from 2013, he said.

–Contact HKEJ at digest



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