China: Foreign Ownership of Onshore Assets Booms

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In the 2nd quarter of 2017, due to continuous economic growth in China and slight fears about Yuan depreciation, foreign holdings of Chinese onshore assets maximised rapidly since 2014.

Statistics from the People’s Bank of China show that foreign ownership increased by CNY ¥528 billion (USD $78.7 billion) in the second quarter. Following this, it grew even more to CNY ¥3.76 trillion by the end of June and so, analysts predict that the trend will continue. The significant economic growth was recognised across loans, deposits, bonds and equities.

The boom of Chinese onshore assets signifies the switch between the end of 2015 and 2016 when the foreign ownership decreased considerably due to investors worrying that the depreciating Yuan would damage their investments. For instance, foreign ownership of Chinese onshore assets declined to slightly over CNY ¥3 trillion, at the end of December 2016.

However, proceeding the launch of bond connect, foreign ownership of onshore Chinese assets is equivalent to merely 1.3% of the entire Chinese bond market at the end of June.