One of China’s leading economist analysts has become heavily bullish about China’s bond market.
Ren Zeping, chief economist of Founder Securities, said in an essay published on social media that China could be standing on the “even of a new bullet market in bonds.”
“Previously we had always issued warnings risk on the bond market based on stagflation and deleveraging…towards the end of May 2017 we began to change our viewpoint,” writes Ren. “An uptick in economic inflation provides basic support, and the value of allocations to the bond market is becoming more evident.
“After the economy’s second bottoming out, shifting from re-inflation to re-deflation, in June our take on the bond market became positive.
“We could be standing on the eve of a new bull market in bonds, and recommend a barbell investment strategy.”
Ren’s remarks come just after Ministry of Finance data reveals that local government bond issuance fell by almost fifty percent in the first half of 2017, with other analysts foreseeing a compensatory boom in issuance during the remainder of the year.