Although the broader Chinese debt market registered mere gains of 1.3% in 2016, due in part to a late sell-off triggered by further deleveraging, efforts to expand the market are underway. China followed up on foreign investors’ expanded access to its interbank bond market in February 2016, and a year later promised to launch the China-Hong Kong Bond Connect by end-2017.
While FX risks continuing to plague yuan investors, bonds are rapidly becoming the most popular asset class for existing holdings denominated in the currency. A recent Standard Chartered survey stated that renminbi bonds hold an 11% weighting in Hong Kong investors’ portfolios and respondents expected to increase yuan-denominated investments by an average of 12% in this year.
In addition to its ‘local’ presence in Hong Kong and Shanghai, AllianceBernstein has the capability to cover renminbi bond issuances spanning domestic and foreign companies, applying top-down and bottom-up sector and credit analysis and risk management. With private banks’ CIO offices closely eyeing developments in the market, fund selectors have picked AllianceBernstein as this year’s Best Fund Provider – RMB Bond.