China Is Hunting for Foreign Buyers for Its Sovereign Debt
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China Is Hunting for Foreign Buyers for Its Sovereign Debt
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Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt
#2I wonder if China is seeing any impediments due to people being loathe to invest in a country where personal freedoms are very restricted and millions of their citizens are swept up in re-education camps. I would be hesitant from a personal standpoint but most larger wealth funds are probably not so restricted. By the same token neither are most manufacturers.
Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt
#3Can someone explain to me why an investor would want to invest in a foreign debt and currency from a country that has capital controls and a history of undervaluing its currency?
Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt
#4Can someone explain to me why an investor would want to invest in a foreign debt and currency from a country that has capital controls and a history of undervaluing its currency?
Investors with other peoples money receiving fees based on annual return.
What do they care about the risks?
Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt
#5I wonder if China is seeing any impediments due to people being loathe to invest in a country where personal freedoms are very restricted and millions of their citizens are swept up in re-education camps. I would be hesitant from a personal standpoint but most larger wealth funds are probably not so restricted. By the same token neither are most manufacturers.
I think most large wealth funds would have an issue too. That would be my guess.
Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt
#6China's leaders have historically shied away from this policy, so as to protect itself from the whims of foreign investors, and maintain maximum control over its economy. This reversal may point to a crisis beneath the surface, as it's probably not their preferred path...
Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt
#7Can someone explain to me why an investor would want to invest in a foreign debt and currency from a country that has capital controls and a history of undervaluing its currency?
They might do it for 3x the return:
"China’s government bonds were among the world’s best performers in 2018, returning 7.7 percent, while U.S. Treasuries earned 0.8 percent, ICE Bank of America Merrill Lynch data show. That gain is in yuan terms, however, and the yuan dropped 5.4 percent against the U.S. dollar."
So 7.7 - 5.4 = 2.3%
which is almost 3x 0.8% return on US Treasuries.
Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt
#8Can someone explain to me why an investor would want to invest in a foreign debt and currency from a country that has capital controls and a history of undervaluing its currency?
As I understand it, when goods are trades the opposite sides each accumulates the others foreign currency. They can use this currency to buy things in the other's country, in this case their debt.
Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt
#9Can someone explain to me why an investor would want to invest in a foreign debt and currency from a country that has capital controls and a history of undervaluing its currency?
A possibility is that they believe that country no longer has much to gain from undervaluing its currency as its neighbors are starting to be real competitors in manufacturing, and now they're more interested in building up a consumer class.
Re: China Is Hunting for Foreign Buyers for Its Sovereign Debt
#10Can someone explain to me why an investor would want to invest in a foreign debt and currency from a country that has capital controls and a history of undervaluing its currency?
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