People wearing face masks walk past the headquarters of the PBoC in Beijing. — Reuters
Beijing: China’s sovereign bonds are an “obvious” trade as the central bank will ease monetary policy for at least another year to support a slowing economy, according to Invesco Ltd.
The People’s Bank of China will need to maintain loose monetary policy as a recovery of the nation’s over-leveraged property sector will be painful and take time, said Freddy Wong, head of Asia-Pacific fixed income.
The yields on longer-maturity bonds may decline by another 10 basis to 20 basis points, he said.
China is “rebooting the economy, the monetary policy is more on the easy side and that’s where the attractiveness will come,” Wong said in an interview in Hong Kong last week. There’s also little currency risk as Beijing wants to maintain stability, he said. — Bloomberg
