Institutions snapping up Chinese treasury bonds are shorting the economy, state media says
"Financial institutions snapping up Chinese government bonds are basically shorting the Chinese economy", Chinese state media says.
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Financial institutions snapping up Chinese government bonds are basically shorting the Chinese economy, China's central bank-backed Financial News reported on Saturday, citing what it said were the views of industry sources and experts.
The
report is the latest warning to the country's bond market after the
People's Bank of China (PBOC) sounded concerns and introduced plans to
sell treasury bonds to cool a bond rally.
It came after the paper said
late on Friday that China's central bank is determined to maintain a
normal upward-sloping yield curve and correct bond-market risks.
The PBOC said
earlier this month it has hundreds of billions of yuan worth of bonds
at its disposal to borrow, and will sell them depending on market
conditions.
The
move shows the central bank's desire to stabilise exchange rate and
economic expectations, Financial News reported, citing unnamed experts.
"Financial
institutions frantically snapping up government bonds equals to
expecting that interest rates will get lower and lower in the future,"
the paper said.
"They are basically shorting China's yuan and the Chinese economy, increasing the pressure for capital outflows."
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