Fixed Income in China: The Secondary Market

by Hua Zhang, July 27, 2010
Industry Trends
Asia-Pacific

Abstract

In 2009, trading value in China’s interbank bond market reached US$7.2 trillion, a 19.7% increase from 2008. Celent expects continued liberalization of China's fixed income market to create new opportunities for trading.

In a new report, Fixed Income in China: The Secondary Market, Celent examines the market size, structure, investors, market trends, settlement, and regulations in this emerging market.

Commercial banks and insurance companies are the largest participants in China's bond market, led by the large state-owned banks. Celent estimates brisk growth in fixed income trading in 2010, led by a recovery in bond trading by mutual fund companies, with the share of commercial banks declining relative to other investor categories. Trading in asset-backed securities and MBS will remain low.

“Fixed income regulation in China has the following thrusts: pushing for a variety of bond products by relaxing guarantee requirements for corporate bonds; strengthening risk controls by requesting that commercial banks provide more information on their fixed income investments; and loosening controls on foreign institutions by allowing foreign banks to conduct bond underwriting and trading,” says Hua Zhang, Analyst with Celent’s Asia Financial Services group and author of the report.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Market Structure

5

 

Interbank Market

6

 

Exchange-Listed Market

8

 

Commercial Bank Counters Market

8

 

Overall Market Trends

9

Trading Value by Fixed Income Type

11

 

Government Bonds

12

 

Central Bank Bills

13

 

Financial Bonds

14

 

Corporate Bonds

16

 

Repo and Derivatives

19

Investors

21

 

Commercial Banks

23

 

Insurance Companies

27

 

Mutual Fund Companies

29

 

Securities Companies

30

 

Nonbanking Financial Institutions

31

 

Nonfinancial Institutions

32

 

Retail Investors

33

 

Other Investors

33

Trade and Settlement

35

Regulations

37

Future Outlook

38

Leveraging Celent’s Expertise

40

 

Support for Financial Institutions

40

 

Support for Vendors

40

Related Celent Research

41

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