Beijing Stock Exchange launches corporate bond trading in milestone for US$21 trillion debt market

Beijing Stock Exchange launches corporate bond trading in milestone for US$21 trillion debt market

Beijing Stock Exchange launches corporate bond trading in milestone for US$21 trillion debt market

The Beijing Stock Exchange has kicked off trading of corporate bonds, giving a boost to China’s 150 trillion yuan (US$21 trillion) debt market, as the mainland’s newest bourse expands its array of products beyond equities.

Three bonds, issued by state-backed investment companies, debuted on Monday, a milestone for the two-year-old exchange that hosts 241 companies, mostly innovative start-ups, with a combined market capitalisation of 382.9 billion yuan.

The Beijing exchange, a minnow compared with the three-decade-old Shanghai and Shenzhen bourses, has been in the limelight over the past few months as it enjoys a raft of policy measures, such as regulators’ pledge to build it into a world-class entity and bolster the quality of listings.

A gauge tracking the bourse’s 50 biggest stocks bucked the loss on the broader market last year with a gain of 15 per cent, the lone bright spot in China’s US$9 trillion onshore stock market.

Stock prices on the new Beijing Stock Exchange are displayed at exchange’s inauguration on November 15, 2021. Photo: Simon Song

The start of corporate bond trading is a step towards building the exchange’s bond market, Zhou Guihua, the bourse’s chairman, said at the bonds’ listing ceremony on Monday.

“The commencement of the bond market is a starting point for building up the Beijing exchange with high quality, which will also add new vigour to the development of China’s bond market,” he said.

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The three issuers raised a combined 2.48 billion yuan from the bond offerings, with the annual coupon ranging from 2.52 per cent to 3.3 per cent.

The three-year note issued by Beijing State-owned Assets Management fell 0.4 per cent on a turnover of 11.2 million yuan, while Beijing Infrastructure Investment’s three-year note added 0.1 per cent, with 11 million yuan of the securities changing hands.

No transaction on Guangzhou Zhidu Investment Holdings Group’s seven-year bond was recorded.

The start of corporate bond trading on the Beijing exchange could not have come at a better time. Investors have been seeking refuge in bonds and ditching stocks since the start of 2024, as there seem to be no signs of improvement in China’s growth prospects.

A flight to safety has fanned a rally in 10-year government bonds, driving down the yield to near a three-year low of 2.518 per cent this year, while the CSI 300 Index of key yuan-traded stocks has dropped more than 4 per cent.

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Government debt has already been issued on the Beijing exchange, with sales of sovereign and local-government debt amounting to 8.45 trillion yuan last year.

Currently, the exchange has provided feedback on 28 issuers seeking to sell corporate bonds and has accepted an additional eight applications, according to its website.

“The success will set an example and encourage more companies to sell bonds on the Beijing exchange,” said Zhu Haibin, an analyst at Kaiyuan Securities.

“It will help to increase the influence and appeal of the Beijing exchange and will further optimise China’s bond market.”

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