Chinese bond funds cap inflows as investors rush to fixed income

A growing number of bond funds in China suspended subscriptions or capped capital inflows, amid signs that large sums are being pumped into fixed income products as stocks falter and banks cut deposit rates.

On Friday alone, more than a dozen bond funds announced measures to restrict new buying, according to documents filed by fund managers.

About 40 short-term bond funds have made similar claims in the past 20 trading days, according to a Chinese newspaper. China Funds.

Xia Haojie, bond analyst at Guosen Futures, said bond funds were looking increasingly attractive to investors at a time when banks are lowering their deposit rates.

ChinaThe five major state lenders cut individual deposit rates last week, a move that could help lower lending rates further to help the economy. The rate cuts came on top of reductions in some deposit rates in April.

A bond fund manager, who declined to be named, also blamed the bond flight on a bearish stock market and a tendency to take shelter ahead of the Chinese National Day holiday week which begins on Sunday. next, October 1.

ChinaThe blue-chip CSI300 index has fallen more than 20% so far this year amid a bleak economic outlook.

China Asset management company said in a bond product statement on Friday that it would reject individual subscriptions exceeding 1 million yuan ($140,300) per day to protect the interests of existing fund holders and enhance the stability of operations.

Huatai-PineBridge Fund Management Co said in a separate product statement that it would suspend accepting new subscriptions.

Chinese bond funds have already seen their assets under management (AUM) jump 18% in the first seven months of the year to 4.8 trillion yuan, according to the latest data.

In contrast, assets under management for equity funds and balanced funds, which invest in both stocks and bonds, fell 7% and 14%, respectively, over the same period.

China may have to cut banks’ required reserve ratio (RRR) in fourth quarter to maintain ample liquidity, official says China Securities Journal reported Saturday, citing economists. Looser monetary conditions could push bond prices higher.

Chinese investors are also boost investment in offshore debt under the Bond Connect program as US interest rates and the dollar rise sharply.

  • Reuters with additional editing by Jim Pollard


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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd newspapers in Sydney, Perth, London and Melbourne before touring South East Asia in the late 1990s. leader of The Nation for over 17 years and has a family in Bangkok.

Robert D. Coleman