Pakistan joins list of central banks to invest in Chinese bonds

[kawaraj]

(Reuters) - Pakistan will join a growing list of central banks that will invest in China's interbank market as the world's second-largest economy opens its capital markets.

The People's Bank of China announced on Monday that it had signed an agreement with the State Bank of Pakistan to help Pakistan invest in its local debt market, without providing details about the size of the investment programme.

China has allowed foreign central banks to invest in its domestic interbank bond market since 2010 as part of efforts to widen investment avenues for foreign yuan asset holders and promote the international use of the Chinese currency.
China and Pakistan signed a three-year currency swap deal worth 10 billion yuan ($1.60 billion) in December 2011 and companies in the two countries are encouraged to accept export and import bills in Chinese yuan.

The central banks of Japan, South Korea, Singapore, Thailand, Hong Kong and Indonesia are among those who invest in China's bonds onshore.

Besides central banks, China also allows yuan clearing banks in Hong Kong and Macau and foreign banks that help settle cross-boarder trade in yuan to invest in its interbank bond markets.

Pakistan joins list of central banks to invest in Chinese bonds | Reuters

 

[Edevelop]

Good.

 

[shuttler]

Best and almost risk free investment in a strong currency which is getting stronger!

 

[Jade]

With Chinese stocks down, bonds are a better way to get Renminbi exposure. However, the effects of diversification is limited as 90% of the Chinese fixed income market constitute Government bonds

 

[Chinese-Dragon]

China has around $3.2 trillion in currency reserves.

So it is a safe investment, there is no question that we have the reserves to cover any debt.

Also, the Yuan has consistently been strengthening against the USD in the past 10 years:

Financial Times - RMB hits 19-year high against the dollar

 

[shuttler]

With Chinese stocks down, bonds are a better way to get Renminbi exposure. However, the effects of diversification is limited as 90% of the Chinese fixed income market constitute Government bonds

Many mainland corporations' shares also listed in HK where the HSI has been very bullish lately! The QE infinity takes its effect on the volatities of the open market in HK

 

[Azazel]

China has around $3.2 trillion in currency reserves.

So it is a safe investment, there is no question that we have the reserves to cover any debt.

Also, the Yuan has consistently been strengthening against the USD in the past 10 years:

Financial Times - RMB hits 19-year high against the dollar

Thanks to QE 3.US fed is printing money to weaken the dollar.They want to reduce trade deficits and go back to manufacturing and start exporting again its the only way they can bring back jobs to US.Also,I really don't think strengthening of Yuan is good for Chinese economy.

 

[Chinese-Dragon]

Also,I really don't think strengthening of Yuan is good for Chinese economy.

Actually, it is. Check this out:

Financial Times - China unlocks the right kind of growth

October 18, 2012

China has never lacked for growth over the past decade but it has suffered from the wrong kind of growth, developing a dangerous reliance on investment.

Tucked into its latest economic data was evidence that the country has finally started to address this problem. Consumption clearly surpassed investment as China’s biggest growth engine, reinforcing a trend that emerged earlier this year – and something that has rarely happened over the past decade.

Consumption is now the largest component of Chinese growth, followed by Investment.

Net exports doesn't add anything to Chinese growth, and if you look at the charts, net exports were actually a DRAG on growth.

 

[agent_ali]

Best and almost risk free investment in a strong currency which is getting stronger!

so could we buy chinese bonds in Pakistan or foreigners are not allowed to purchase such bonds?

 

[Sahasranama]

China has around $3.2 trillion in currency reserves.

So it is a safe investment, there is no question that we have the reserves to cover any debt.

Also, the Yuan has consistently been strengthening against the USD in the past 10 years:

Financial Times - RMB hits 19-year high against the dollar

LOL.. The Irony of investing in Chinese bonds because you have foreign reserves in USD

So why does China buys US Bonds while poor Pakistanis are forced to buy Chinese bonds ?