A rising variety of bond funds in China have suspended taking subscriptions or capped inflows, amid indicators cash is gushing into fastened earnings merchandise as shares wobble and banks reduce deposit charges.
On Friday (Sep 23) alone, greater than a dozen bond funds introduced measures to limit new purchases, in accordance with fund managers’ filings.
Round 40 short-term bond funds made comparable statements prior to now 20 buying and selling days, in accordance with Chinese language newspaper China Fund.
Xia Haojie, bond analyst at Guosen Futures, mentioned bond funds seemed more and more engaging for traders at a time when banks are decreasing their deposit charges.
China’s prime 5 state lenders reduce particular person deposit charges final week, a transfer that would assist deliver down lending charges additional to assist the financial system. The speed cuts got here on prime of reductions in sure deposit charges in April.
A bond fund supervisor, who declined to be named, additionally attributed the flight to bonds to a bearish inventory market, and a bent to hunt shelter forward of the week-long Chinese language Nationwide Day vacation that begins Oct 1.
China’s blue-chip index CSI300 has tumbled greater than 20 per cent to this point this 12 months amid gloomy financial prospects.
China Asset Administration mentioned on Friday that it will reject particular person subscriptions exceeding 1 million yuan (US$140,300) a day to guard the curiosity of current fund holders and strengthen stability of operations.
Huatai-PineBridge Fund Administration mentioned in a separate assertion that it will droop accepting recent subscriptions.
Chinese language bond funds have already seen their property beneath administration (AUM) bounce 18 per cent through the first seven months of the 12 months, to 4.8 trillion yuan, the newest information exhibits.
In distinction, AUM of fairness funds and balanced funds, which put money into each shares and bonds, dropped 7 per cent and 14 per cent respectively throughout the identical interval.
China might have to chop banks’ required reserve ratio (RRR) within the fourth quarter to maintain liquidity ample, the official China Securities Journal reported on Saturday, citing economists. Simpler financial circumstances might push bond costs larger.