Offshore buyers lift China bond holdings for 9th month in November

SHANGHAI: Foreign investors increased their holdings of Chinese bonds for a ninth consecutive month in November, adding to positions in government bonds and some policy-bank bonds as a domestic sell-off led to a surge in yields.

Holdings of Chinese treasury bonds by overseas investors rose 14.4 billion yuan in October to 573.5 billion yuan ($86.66 billion), according to Reuters' calculations based on data from the China Central Depository and Clearing Co (CCDC), the country's primary clearing house.

After falling in October, offshore investors increased their holdings of Chinese policy bank bonds by 1.84 billion yuan to 316.4 billion yuan. Total offshore holdings of all Chinese bonds cleared by CCDC rose by 15.3 billion yuan in November to 936.6 billion yuan.

Market fears over the impact of a government campaign to reduce excessive financial risk drove yields on Chinese government and policy-bank bonds to their highest levels in three years in November.

On Friday, the yield on 10-year Chinese government bonds was 3.916 percent - down from a peak of 4.03 percent on Nov. 23. but up 28.4 basis points from the end of September

"The market has already calmed down ... we have always seen that whenever the five-year or the 10-year yields approach 4 percent, it seems to become quite attractive for some long-term investors," said Frances Cheung, head of Asia Macro Strategy at Westpac.