Insight
China’s bond market could dominate: expert
SHANE WHITE, CONTENT MANAGER, INSTITUTIONAL, ANZ | APRIL 2019
China has the potential to be the world’s largest bond market as it strives to overcome growing pains, according to Ooi Boon Peng, CEO Singapore at Eastsprings Investments.
Currently valued at $US13 trillion, according to The Financial Times, China’s market is the world’s third largest - behind on the United States and Japan. Peng told ANZ’s Finance & Treasury Forum in October the country has the right approach to eventually sit on top.
“[Chinese Premier] Xi Jinping has taken the country to…. the point where they are trying to stimulate the economy,” he told the audience in Singapore.
“I think as a whole if you think about it China actually despite its challenges remains potentially the largest bond market… and will provide the liquidity that we need as global investors.”
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““Despite its challenges [China] remains potentially the largest bond market… and will provide the liquidity we need as global investors.”
Ooi Boon Peng, CEO Singapore, Eastsprings Investments
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Ian Bremmer, President & Founder of Eurasia Group, says the growth of China as a geopolitical player means many countries – particularly those in the Asia-pacific region – will be forced to make difficult decisions around tech when it comes to aligning with the world’s superpowers.
“Some countries in the next 10 years are going to have to make choices,” he said. “I don't just mean countries like Laos and Cambodia.”
”I even mean countries like South Korea where the government is increasingly being oriented in a Beijing direction both politically and overwhelmingly economically.”
The comments come amid suggestions the wealth generated in Asian markets is outgrowing local capacity to absorb it, opening up opportunities for regions like Australia.
“What continues to drive this secular shift is real growth in GDP, growth in wealth across the Asian countries, and the resultant growth in liquidity,” Jimmy Choi, head of capital markets, global, at ANZ, told The Australian Financial Review.
“The first theme is that investors buy their own country's paper, so you see Chinese investors buying Chinese names."
“But as significant liquidity grows, it starts to need to diversify – and that’s where Australian issuers come in.”
Shane White is Content Manager, Institutional at ANZ
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