Chinese investors are shifting into long-bond ETFs as the stock market declines. Two onshore ETFs tracking 30-year government bonds attracted 13.8 billion yuan ($2.1 billion) in October, the highest since July 2025. The Pengyang China Bond 30-year Treasury Bond ETF rose 57% since mid-year, while the Bosera SSE 30-Year China Treasury Bond ETF gained 68%.
Government bonds are supported by moderate economic growth, ample liquidity, and a lack of better alternatives. Chinese stocks have entered bear territory due to a prolonged consumption slump and doubts over AI profitability. Analyst Liao Zhiming of Huayuan Securities expects 30-year yields to fall to 2% by year-end from 2.05%.
Yields on five- and seven-year bonds hit record lows, and the 10-year yield is near its 2025 low. Futures positions in 30-year bonds have surged to a record, driven by hedge fund interest. Jeffrey Zhang of Crédit Agricole CIB in Hong Kong noted that accommodative liquidity will continue to support bond demand, with bank share outperformance signaling strong appetite for quasi-fixed income assets.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing