Mingpao, one of the primary Hong Kong newspapers, recently reported that, in March, foreign investors reduced their holdings of Chinese bonds by more than US$15 billion setting a record for the largest withdrawal from the world’s second-largest bond market in a single month. Market analysts expressed their belief that the possible factors for the sharp sell-off include concerns about the geopolitical risks of investing in China, broader economic uncertainty, and a weakening market yield advantage over U.S. bonds. Global investors also pulled more than US$7 billion from onshore Chinese stocks through deals with the Hong Kong market last month. Data showed that in March, foreign institutional investors reduced their holdings of Chinese inter-bank bonds for the second consecutive month with a scale of RMB 98.2 billion yuan (around US$15.4 billion), an increase of nearly 50 percent year-over-year. Among this volume, for the second month in a row, foreign institutional investors reduced their holdings of Chinese government bonds by RMB 51.8 billion yuan (around US$8.13 billion), the highest monthly outflow on record.
Source: Mingpao, April 8, 2022