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Matt Jones

Welcome to Idea Jeneration with Stephen Jen, a podcast series offering insights into long-term themes within global markets.

This is a production of Eurizon SLJ Capital, and has been recorded for professional investors. My name is Matt Jones, Head of Distribution for Eurizon SLJ Capital.

In this episode, we ask Stephen to explore the supply and demand dynamics within the Chinese onshore bond market.

Stephen Jen

What's so special about the Chinese bond markets, in addition to its safe haven feature: it's interest rates are high, the sovereign rate is about 3.2%, for the 10-year, substantially higher than all developed country yields and almost as high as emerging market yields. So you see this progression over time of the size, how the Chinese bond market has grown over the years. The average growth rate over the years has been above 20%; it is now close to 18 trillion dollars; it is the second largest bond market in the world, second to the US bond market, ahead of the Japanese market.

In fact, the capitalisation of the Chinese bond market is now more than twice as big as the entirety of emerging market bonds. And in two years time - if the Chinese bond market continues to grow at this pace - in two years time, this market will be as big as all of the European bond markets combined, including the UK, Swiss and Eurozone bond markets. So it is very, very big.

But what is special about this bond market is that very few foreigners own this market; foreign investors account for only 3.5% of the market. But of the 3.5%, 1.5% comes from central banks holding the renminbi as reserves. If we remove that and calculate the ownership structure of private institutional investors from outside China, we're talking about 2% ownership. This is very low by historical standards, and we think that the timing is really special to enter the market because it's still extremely early and people are just starting to understand the Chinese bond market. It's already very big - it's not like any other market that in the past just opened up when it was not mature and it was also growing; but this is a case where the market is already big and is suddenly being opened up to foreign investment.

Matt Jones

Further information can be found within the episode description, and more insights are available at

The views expressed within this podcast were accurate as at the time of publication. Opinions expressed by the speakers are their own and do not necessarily reflect those of Eurizon SLJ Capital Limited, Eurizon Capital SGR or the Intesa Sanpaolo Group.


Audio taken from the web conference Emerging Market Perspectives, recorded on 21st April 2021


None of the contents of this document should be understood as constituting research on investment matters, or as a recommendations, advice or suggestions, implicit or explicit, with respect to an investment strategy involving the financial instruments discussed, or the issuers of the financial instruments, nor as a solicitation or offer, nor as consulting on investment matters, of a legal, fiscal, or other nature. All the companies of the Intesa Sanpaolo Group, its administrators, representatives, or employees, decline any responsibility (fault-based or otherwise) deriving from indirect damages potentially caused by the use of this communication or its contents, or in any case deriving in relation to this document, nor may they be consequently held liable for any of the above. The information provided and the opinions contained in this document are based on sources considered reliable and in good faith. However no declaration or guarantee is offered by Eurizon SLJ Capital Limited, explicitly or implicitly, on the accuracy, exhaustiveness and correctness of the information, and there is no guarantee that results, or any other future events, will be compatible with the opinions, forecasts, or estimates contained herein.

Views accurate as at the time of publication. Opinions expressed by the authors are their own and do not necessarily reflect those of Eurizon SLJ Capital Limited, Eurizon Capital SGR or the Intesa Sanpaolo Group.
The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.


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