Foreign investors cut their holdings of Chinese government bonds (CGBs) by 51.8 billion yuan in March to 2.43 trillion yuan ($382 billion), data from interbank bond market clearing house China Central Depository & Clearing Co showed.
It was the steepest monthly percentage drop in foreign investors’ holdings of CGBs since August 2015, Reuters calculations showed.
China’s net foreign bond outflows were a surprise, Nomura analysts said.
“We believe robust inflows from net trade settlements, foreign equity and net FDI may have more than offset foreign bond outflows,” they said in a note.
The Central Bank of Russia (CBR) and Russian sovereign wealth funds might have also sold some of their holdings of Chinese government securities as a precursor to Moscow’s invasion of Ukraine.
“This may raise some concerns over yuan selling pressure and bond outflows ahead as the CBR’s holdings of yuan securities could be about $83 billion,” Nomura said.
However, analysts said they remain optimistic that foreign bond inflows are likely to return in coming months in view of China’s improving macro outlook.
- Reuters, with additional editing by George Russell
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