Foreign investors cut their holdings of Chinese sovereign bonds by the largest amount on record in June. It is reflecting a surge in capital outflows as global central banks raise rates as Beijing eases.
Foreign investors reduced their positions in China’s onshore sovereign bonds by 55.9 billion yuan ($8.3 billion) last month, the most since 2014. When Bloomberg began compiling data based on official figures. They had 2.32 trillion yuan of banknotes at the end of June, compared with a peak of 2.52 trillion yuan in January.
China-Bond released the data two days after a PBOC statement. Data showed foreign investors had cut their holdings of the country’s sovereign bonds for the fifth month. It is the longest stretch of such outflows. The attractiveness of yuan-denominated assets is falling globally. As China’s yield premium over the United States turned into a discount amid aggressive rate hikes by the Federal Reserve.
Sovereign bonds weren’t the only ones facing outflows. Foreign investors also net-cut 90 million yuan of local government bonds. And 35.47 billion yuan of monetary policy notes in June, ChinaBond data showed.