Bond· Fund

QIC Ltd putting pension money into China’s bond market

minutes 2018/08/07 10:12:52
QIC, China bond, QFII

Aug 07, 2018 (China Knowledge) - Brisbane-based money manager QIC Ltd is on path to invest in China's USD 11 trillion bond market. Since the country's gradual opening up of its financial sector; especially its bond market has attracted foreign investors in a big way.

Started with the Bond Connect program in Hong Kong which allows foreign investors a year ago to buy into mainland bonds, the market now average RMB 6.5 billion a day, and it is expected to grow to between RMB 25 and 30 billion daily by 2020 according to Julien Martin, the chief of Bond Connect. And it is reported that QIC is likely to tap on this channel to begin its investments, and will be the first by an Australian pension fund manager to diversify its USD 74 billion portfolio into China's bond market.

The relative higher yields of China's treasuries over many developed countries and the U.S is attractive to foreign pension funds like QIC that look for safe haven with ultra large investment size. Last month the Chinese government announced it will remove the quota for the Qualified Financial Institutional Investor (QFII) and will ease the application for further capital injections could further boost the activities in the onshore bond market.

The onshore bond trading platforms mainly comprise of Interbank Bond Market, Shanghai Stock Exchange and Shenzhen Stock Exchange see average daily turnover of around RMB 200 billion, not including bond repo.

With a fast growing pensions' pool of money estimated to reach USD 4 trillion by 2025 the Australian pension fund managers will definitely see investing China's bonds an alternative both desirable and lucrative.

Besides the fixed income market other investment opportunities include the equity and money market that are also gradually open to direct foreign participation.

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