Sluggish stocks spur new interest in bonds
Updated: 2008-03-06 10:53
Investors are turning to bonds and other alternative investment vehicles amid a lackluster stock market.
Four funds invested in government bonds and other fixed-income securities were floated in the past two months.
The benchmark Shanghai Composite Index yesterday shed 0.99 percent to end at 4292.65, with 449 of 1,016 stocks closing lower. The lead indicator has shed a total 19.9 percent, in the past two months.
Analysts said a possible global economic slowdown and tightening measures at home to combat higher CPI have depressed investor sentiment.
Meanwhile, the benchmark Treasury Bond Index has climbed 2 percent to 112.39 points since the middle of December last year. The index hit a record high of 112.84 on Feb 14.
A bond fund issued by the Bank of Communications Schroder Fund Management Co on March 3 drew a record 1.4 billion yuan on its first day of subscription.
Analysts said financial products related to bonds, which offer relatively steady returns in the longer term, help offset the risks resulting from a volatile stock market and optimize investment portfolio structure.
"Bonds allow investors to seek cover for at least part of the risk in these uncertain times when the stock market is going through a period of fluctuation," Nie Wen, an analyst at Industrial Securities Co in Shanghai, said.
Analysts said the Chinese bond market will continue its upward momentum in the coming months. As a result, bonds are expected to become increasingly popular with investors, which will help increase liquidity in the fixed-income securities market.
"Anticipation of a rising bond index will fuel public enthusiasm for investing in bond funds," Huang Dong, an analyst at Orient Securities in Shanghai, said.
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