Thursday March 3 2016
News Source: Global Exchanges
Focus: Credit Rating
Type: General
Country: China
Link: https://www.fitchratings.com/site/fitch-home/pressrelease?id=1000367
Further to the decision by the People’s Bank of China (PBOC) to allow most foreign financial institutions to invest in the domestic interbank bond market without any quotas, Fitch Ratings has commented that it could ultimately improve domestic market depth and liquidity, market disclosure and corporate funding channels. That said, the extent to which overseas financial institutions will be willing to invest remains to be seen – given existing capital controls, the macroeconomic outlook on China, and exchange-rate expectations.
In the short term, Fitch does not believe that the PBOC decision will result in a significant influx of foreign participation in the domestic interbank bond market, which accounts for over 90% of China`s total domestic bond market. This is especially the case as foreign investor confidence in the direction of the yuan and concerns over the structural slowdown in the economy may weigh on interest. Other issues relating to the level of disclosure and transparency in China`s domestic interbank bond market may also deter some foreign investors.
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