HALISTER1: Wait for Clearer China FX Policies Before Buying Bonds: SEB

Wait for Clearer China FX Policies Before Buying Bonds: SEB

(Bloomberg) -- Key developments in China need to be clarified before real-money investors should buy Chinese bonds following last week’s announcement to open the market, Sean Yokota, head of Asian strategy at SEB writes in note today
  • Announcement sounds like China is on path to opening capital account allowing more money to come in, but at the same time, not allowing money to leave
  • More recognizable pattern in foreign exchange policy is needed; China has moved back and forth in FX policy over last 6 mos. making policy direction uncertain
  • PBOC has taken more control of currency movement, after earlier allowing yuan to trade more freely
  • Announcement was not clear on what kind of interest rate and FX products foreign institutional investors have access to onshore
  • NOTE: PBOC removes quotas for overseas investors in interbank bond market
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Sean Yokota (Skandinaviska Enskilda Banken AB)

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