Commentary
Foreign investors continued to reduce their holdings of Chinese bonds in May for the fourth consecutive month. The divergent monetary policy between the United States and China, as well as a fundamental economic weakening, have driven foreign investors away from China in droves.
And unlike Chinese selloff periods over the last decade-plus, foreign investors no longer deem Chinese investments more attractive on a risk-adjusted basis compared to developed markets.
Chinese yuan-denominated bonds have suffered continued drawdowns according to official data from China Central Depository & Clearing Co. The outflows have also hit the yuan currency, hitting its lowest relative value in almost two years. Since last June, the yuan has lost 3.5 percent versus the dollar….