SHANGHAI: Foreign investors' holdings of Chinese government bonds touched a record high in July, official data showed, and rose at the fastest monthly pace since April ahead of the bonds' phased inclusion in a major global index.
Offshore holdings of CGBs totalled 2.18 trillion yuan (US$337.26 billion) at the end of July, according to data released on Wednesday (Aug 4) evening by interbank bond market depository China Central Depository and Clearing (CCDC).
That was an all-time high, and up 2.3 per cent from a month earlier.
The rise in foreign holdings comes as Chinese government bonds are set to be included in index provider FTSE Russell's flagship World Government Bond Index over 36 months from the end of October, a development that is expected to draw billions of dollars into the world's second-largest bond market.
Holdings of policy financial bonds, issued by China's policy banks, stood at 1.04 trillion yuan, also a record. That was up 2.4 per cent from the end of June.
Total foreign holdings of bonds cleared through CCDC totalled 3.38 trillion yuan, up 2.3 per cent from a month earlier.
While Chinese sovereign bond yields slipped in July on expectations of policy easing to support an uneven recovery, the spread between the Chinese and US 10-year yield was barely changed over the course of the month.
The yuan was also stable in July, softening just 0.06 per cent against the dollar.
Additional interbank bond market holdings data from Shanghai Clearing House was not yet available on Thursday morning.