China bonds index declines as banks drag down financials

Lenders to small businesses among banking losers on day all sub indexes suffer drops  

by Rosie Slater
China bonds decline as banks drag down financial debt index 

(ATF) All ATF indices were down on Wednesday: the flagship ATF China Bond 50 index retreated 0.12% and closed at 107.78. The ATF ALLINDEX Financials and the ATF ALLINDEX Local Governments lost 0.08% and 0.05%, while the ATF ALLINDEX Corporates and Enterprise gauges were down 0.06%.

Significant drops were apparent in the China Bond 50 index among seven financial institutions. These were: Central Huijin Investment (-0.6%), China CITIC Bank Corporation (-1.39%), Hua Xia Bank (-0.35%), China Zheshang Bank Co. Limited (-1.34%), CITIC Securities Company (-0.47%), Agricultural Development Bank of China (-0.57%), and China Development Bank (0.16%).

The issuance of small- and micro-financial bonds by Chinese banks surged 330% to 275.28 billion yuan in the first five months, Caixin reported on Wednesday. This follows a series of government policies to support financial institutions issue 300 billion yuan ($42bn) in financial bonds to help small businesses weather the coronavirus pandemic. China Citic Bank is one of the largest issuers, stated Caixin. 

Losses were seen also for China Huaneng Group, a state-owned electricity generation enterprise, whose bonds fell 1.15% to close at 101.47. PetroChina Company Limited continued declines seen since its announced it would issue more debt; bond lost 0.63% to close at 103.25.  

Meanwhile, Bank of Communications bonds gained 0.13% and closed at 104.37. Zhejiang Geely Holding Group, an automotive company, was also up with gains of 0.29%, closing at 100.36. The car maker is likely to buy a 15.24% stake in Anhui Hualing Xingma Automobile (CAMC), a listed commercial vehicle company, according to a report by First Finance and Economics on Tuesday.