Related: Japan ETFs Brush Off Escalating Trade War Fears
Risk-On for Japanese Bond Investors
The risk-on mentality that is prevalent in a bull market can be seen in Japanese fixed-income investors who have been flocking to Chinese bonds in order to appease a growing hunger for high-yield as access to these areas of the $12 trillion Chinese bond markets have opened due to recent reforms. Data provided by the Japanese Ministry of Finance revealed that Japanese investors purchased 151 billion yen ($1.33 billion) of Chinese bonds year-to-date, which is close to double the amount invested in 2016.
“A growing number of investors are interested in Chinese bonds now,” said Hiroshi Yokotani, portfolio strategist at State Street Global Advisors. “The biggest attraction is their relatively high yield.”
In addition to the higher yields offered by Chinese bonds, China’s latest policy changes have provided the necessary ingress to allow more Japanese investors and investors across the globe to take part in the high-yielding bond bonanza.
“China’s policy stance on markets is becoming very open, which we take very positively. And the speed of their market reforms is quite fast, compared to other countries,” said Koichi Matsumoto, general manager of global fixed income investment.
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