ATF indexes steady; yuan hits new highs

Coupon payments drag down benchmark index

ATF indexes steady; yuan hits new highs
The China Bond 50 Index fell 0.07%

(ATF) The ATF indexes were little changed Wednesday, while the yuan surged to a 27-month high on the country’s sustained recovery and expectations of a stimulus package on the back of victory by democratic US presidential candidate Joe Biden. 

The ATF ALLINDEX Corporates, Financial and Local Governments sub-gauges inched up 0.01%, closing the day at 98.45, 105.65 and 117.11, respectively. The benchmark China Bond 50 index, along with the ATFALLINDEX Enterprise sub-gauge, fell 0.07% and 0.08%, respectively, but this was on the back of a coupon payment by Aviation Industry Corporation of China. The price of its bond fell by 3.78%, and dragged down both indexes.

Beyond that, the only significant moves were recorded in yield terms in the bonds of Xi’An Hi-tech (-0.04% for a price rise of 0.02%), Hangzhou Qianjiang New City (-0.07% for a price rise of 0.01%) and Beijing State-Owned Assets (-0.86% for a price rise of 0.01%). All names are constituents of the ATF ALLINDEX Enterprise and were last traded on 9 September, 7 July and 13 October respectively. Meanwhile, the yield on Bank of Dongguan, a constituent of the ATF ALLINDEX Financial, dropped 1.25% for a price increase of 0.01%. Its bonds last traded on 16 October. 

ASIAN MARKETS: Yuan soars on resurgent economy

The yuan hit 6.6276 per USD on Wednesday after the Chinese central bank set its strongest guidance since July 2018 at a midpoint rate of 6.6781 per dollar, versus a previous fix of 6.6930, according to online data provider Trading Economics.

The yuan is guided by the People’s Bank of China daily fixing of the currency, set at 9.15am Beijing time on each trading day.

The central bank’s move comes after China posted accelerated economic growth in the third quarter of 2020, as well as a rebound in consumption indicating a broadening of its recovery. GDP for the period July to September expanded 4.9% in annual terms, following a 3.2% increase in the second quarter. Retail sales rose for the second consecutive month by 3.3% year-on-year from 0.5% in August.

Meanwhile, markets are increasingly speculating a Biden win, followed by a fresh round of stimulus measures to support the US’s flagging economy as a result of the global pandemic. This is putting additional pressure on the dollar.

China Bonds China Bonds economy markets ATF China Bond 50 Index