China’s Government Bonds, among some of the world’s top-performing debt last year, have tumbled so much over the past month they’ve become the worst bets in Asia-Pacific.
The yield on 10-year government bonds has surged 32 basis points since late March, as wagers on broad monetary easing receded due to a better economic outlook and a rally in stocks.
Singapore’s sovereign notes were the second-worst performer, followed by the Philippines.
Further strain on Chinese debt came Wednesday when the central bank injected cash by offering targeted medium-term loans.
That move means an imminent cut to lenders’ reserve requirements is unlikely and reinforces bets that aggressive loosening seen in 2018 won’t be repeated.
The plunge in Chinese bonds is a far cry from 2018 when the notes rallied on weakening risk appetite.
It comes as some government and policy bank bonds have just started getting included in a major global index.
The debt may begin looking attractive to investors soon, with Pacific Investment Management Co. saying the slump has made the notes so cheap that it’s probably time to start buying on a small scale.
The yield premium on China’s 10-year bonds over Treasuries of the same tenor also expanded to the widest in a year, making yuan assets more appealing to foreigners.
“Published & Edited By: Senior Financial Analyst. Alaa Tabib – Gulf Brokers DMCC – Regulated & Licensed By SCA & DGCX”
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