Chinese government bonds and the yuan fell in price amid speculation that foreign funds are actively getting rid of their assets in the country, writes Bloomberg. This blow is connected with the development of the situation with Beijing’s attack on its own business, accompanied by stricter regulation in a number of sectors.
The yield on ten-year government bonds rose by seven basis points to 2.94 percent, which was the highest in almost a year. The exchange rate of the country’s national currency on the offshore market fell by 0.6 percent and approached the April minimum, amounting to 6.52 yuan per dollar. Stock indexes also continued to decline.
“The market is widely discussing that some American funds are aggressively selling off assets in Hong Kong and China, as the US may limit investments in these regions. We cannot determine for sure whether this is true or not, but the market is afraid that foreign capital will actively leave the Chinese stock and bond market, “ explained Li Kunkun, a trader at Guoyuan Securities Co.
The concerns arose against the background of a sudden tightening of Beijing’s policy towards educational companies, following an attack on the technology sector. On July 23, it became known that Beijing decided to make it difficult for organizations engaged in the field of additional school education to work and finance, which caused the collapse of the value of their securities. The shares of the technology sector also suffered, the next blow for many months was the fine imposed on Tencent.
Beijing’s actions against its own companies have already led to negative consequences for local companies. According to Bloomberg, Chinese entrepreneurs suffered multibillion-dollar losses in the first half of 2021.