HONG KONG Nov 12 Pyramis Global Advisors, a
unit of Fidelity Investments, said on Monday it would like to
gain exposure to China's yuan assets, but its biggest concern is
a lack of liquidity in the fledgling dim sum bond market.
Offshore yuan bonds, also known as dim sum bonds, are yuan
bonds sold outside China. Since the first issue in 2007, total
issuance volume has reached 132 billion yuan ($21.14 billion)
year to date, according to Thomson Reuters data.
"At the moment, we don't invest in dim sum bonds for our
global portfolios and the reason really is liquidity," said
Jamie Stuttard, head of international bond portfolio management
and portfolio manager at Pyramis, which was formed in 2005 and
has $180 billion in assets under management.
With more participation from global investors, including
fund managers, private banks, insurance companies and foreign
central banks, the nascent market is showing strong momentum,
although a lack of a mature benchmark and liquidity remain
"The liquidity is moving in the right direction, but it's
just not there yet from our perspective for us to find it
attractive," Stuttard said.
He added that the company was closely watching China's
developments and the yuan was on the list of currencies which it
deemed to have attractive features.
Liquidity is an important factor investors consider before
entering a new market, as it will be crucial for them to quickly
find a trading counterparty if the market deteriorates and they
want to exit.
Traders said daily trading volume of dim sum bonds in the
secondary market had improved a lot since the market came into
being, but it was still well below the dollar market or even
onshore yuan bond market.
Echoing comments from mainland Chinese officials at the
weekend, Pyramis also said the world's second-largest economy
may have hit bottom, with signs of improvement emerging.
"What that also translates into is that there will probably
be less need for the authorities to introduce stimulus
packages," said Nicholas Eisinger, a research analyst at
Pyramis, adding that China had limited risk to experience a
China's trade surplus ballooned to its biggest in 45 months
in October as export growth darted to a five-month high above 11
percent, surpassing expectations.
Zhang Ping, head of the National Development and Reform
Commission (NDRC), said on Saturday China's economy had halted
its slowing trend and he was confident its gross domestic
product (GDP) growth would exceed 7.5 percent in 2012.
As a multi-asset-class investor, Pyramis has $79.9 billion
international/global equity and $71.8 billion fixed income
products in its portfolio, with another $24.8 billion in U.S.
equity and $3.5 billion in alternatives.
($1 = 6.2450 Chinese yuan)
(Reporting by Michelle Chen; Editing by Kim Coghill)