Investors confident of yuan asset attractiveness, Chinese economy

2023-01-09 13:57


Financial analysts said the market response tothe People's Bank of China's issuance of central bank bills in Hong Kongdemonstrates the attractiveness of yuan-denominated assets and the confidenceof global investors in the Chinese economy.

On Tuesday, the PBOC, the country'scentral bank, issued six-month central bank bills worth 5 billion yuan in HongKong, with the winning bid interest rate of 2.2 percent. The application amountis 19 billion yuan, making the over-subscription 3.8 times compared to theissuance amount.

"If the mainland reopens itsborders, it may boost domestic consumption and investment. Investors areanticipating this will happen," Hung said.

Referring to the attractiveness ofyuan-denominated assets, Hung said this depends on the trend of the renminbi in2023.

"If the economy of the UnitedStates dips into recession next year, then US interest rate hikes may not be sodrastic as they have been in the past two years. When the pace of US interestrate hikes slows down, the strength of the US dollar may weaken and that mayboost the renminbi exchange rate next year," she added.

The central bank bill issuance was widelywelcomed by banks, mutual funds and other institutional investors fromcountries and regions in the Americas, Europe and Asia. International financialorganizations also actively participated in the subscription.

"The over-subscription amountindicates investor confidence in China's sovereign rating and the Chinesemarket. Investor confidence is gradually coming back," GROW InvestmentGroup Chief Economist Hong Hao said.

Hong also said whether the renminbi willsustain a rising trend in 2023 depends on the strength of the Chinese economicrecovery next year.

The central bank bills are the 12thissuance of this year. The maturity date is June 22 next year.