China to open exchange bond market to institutional investors

China said it would allow foreign institutional investors to invest in bonds on its exchange market as part of efforts to help increase capital inflows to the country.

The Chinese authorities in a notice released on May 27, said that the move would further open up the bond market.

The document, jointly rolled out by the People’s Bank of China (PBOC), China Securities Regulatory Commission (CSRC), and the State Administration of Foreign Exchange, said the trade would come into effect on June 30.

According to the notice, overseas institutional investors can invest in China’s exchange bond market directly or through bond connect schemes and neither of the two methods need to go through separate filing or approval procedures.

The PBOC and CSRC encourage foreign institutional investors to invest in China’s bond market as medium- and long-term investors.

At the end of April, 1,035 foreign institutional investors held 3.9 trillion Yuan of debt instruments in China, surging 225 per cent over the figure in the end of 2017.