Yuan seen as ma­jor bar­rier

New Straits Times - - Business / World -

HONG KONG: China’s pol­i­cy­mak­ers plan to open the doors wider than ever to for­eign in­vest­ment in the coun­try’s US$3 tril­lion (RM13.02 tril­lion) bond mar­ket, in part to help shore up the strug­gling yuan. But the cur­rency is also prov­ing to be a ma­jor bar­rier to the suc­cess of their plan.

For­eign­ers own less than two per cent of China’s US$3.3 tril­lion in out­stand­ing bonds and said get­ting their cash out of China and re­cent weak­ness of the closely con­trolled yuan were ob­sta­cles to in­vest­ment.

For­eign in­vestors are also scep­ti­cal they can as­sess risk ac­cu­rately when most of the US$2.1 tril­lion in cor­po­rate bonds are rated in­vest­ment grade by do­mes­tic rat­ing agen­cies.

“If in­vestors wanted to have more ex­po­sure to Chi­nese bonds, we can do it to­mor­row,” said Strat­ton Street part­ner and chief in­vest­ment of­fi­cer Andy Sea­man.

“But un­for­tu­nately, they don’t. It’s very dif­fi­cult to per­suade peo­ple be­cause of the cur­rency. They don’t want yuan,” he said. Reuters

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