Financials hold up China bonds despite economy concern

Increased foreign access to onshore markets boosts lenders but poor export and jobs data weighs on broader market 

Financials hold up China bonds despite dour warnings on economy
Yields on the bonds of China Everbright’s financial leasing unit climbed Monday.

(ATF) Chinese financial corporate bonds were the biggest gainers Monday after measures to increase foreign participation in in China’s capital markets came into force.

Yields fell on the debt of Everbright Financial Leasing and GMAC-SAIC Automotive Finance as the scrapping of duties charged to overseas investors opened the floodgates to foreign flows into bonds as well as stocks and other markets in China.

Nevertheless, sentiment was subdued by concern that the nation’s recovery may on shakier ground after dat showed exports had dipped and job creation slowed. The ATF China Bonds 50 Index climbed 0.01% and the Allindex sub-indices were also little changed: Corporates climbed 0.01%, Enterprises advanced 0.02%, Financials were unchanged and Local Governments rose 0.01%.

The yield on Everbright Financial Leasing’s 4.12% fell 0.06% and the 2.68% security of canmaker GMAC-SAIC’s finance arm declined 0.18%. 

The new investment measures from the People’s Bank of China allows much greater access to the nation’s onshore futures markets, an important tool in hedging stock market positions as well as for speculating on price movements. Foreign investors are also be able to lend out their holdings of shares that trade in Shanghai and Shenzhen, allowing others to use them to take bearish positions. 

China's factory activity in October raced ahead to the fastest pace in nearly a decade riding on soaring domestic buying fuelled by pent-up demand and stimulus driven spending. But a dip in exports and sluggish jobs recovery is clouding the outlook.

READ MORE: China factory activity at decade high but risks lurk

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