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Collection of Talks on Bond Market Investment Strategy Forum 2019

On January 16, the China Central Depository & Clearing Co., Ltd. (CCDC) held a “2019 Bond Market Investment Strategy Forum” in Beijing. The theme of the forum was “New Challenges and New Momentum”, focusing on the new momentum of China's macro economy and bond market under the new situation. Over ten representatives of regulatory authorities and market participants delivered keynote speeches and conducted panel discussions. More than 400 representatives of Outstanding Members of CCDC for 2018 and readers of the "ChinaBond" magazine attended the event.


Chen Gangming, the president of the CCDC noted in his opening speech that in the past year, based on the new-era requirements and CCDC’s core mandates, the company carried out some key tasks focusing on serving the real economy, preventing and containing financial risks, and promoting reform and opening up. In 2019, the company will continue to assume the responsibility of the core national financial infrastructure, continuously optimize services in the aspects of market, supervision, macro-policy and financial reform and opening up, maintain a firm security line to provide effective support for financial regulation, provide quality service for institutional innovation, provide support for market opening, and continuously promote the development of financial infrastructure.

Liu Shijin, deputy director of the Economic Committee of the National Committee of the Chinese People's Political Consultative Conference, vice chairman of the China Development Research Foundation, and member of the Monetary Policy Committee of the People's Bank of China, delivered a keynote speech on "Macroeconomic Trends and New Growth Momentum". He believed that understanding the transition of China's economic growth stages was the key to comprehending the future trend of China's economy. From a long-term perspective, China's demand structure, supply structure and financial structure are being adjusted orderly, which reflects the inherent logic of China's economic transformation. While making some predictions about the future economic growth rate, he suggested that the focus of economic growth should shift from “climbing the mountains” to “filling the gaps”, that is, increasing policy support in the short-board sectors and improving productivity and market liberation thereof.


Han Yongwen, deputy chairman of the China Center for International Economic Exchanges and member of the 13th National People's Congress, pointed out that China's economy faced many new difficulties in 2018. With the efforts of the CPC Central Committee and the State Council, the economy has maintained a stable momentum in general. The achievements were not easily won, and there are some gaps warranting further improvement. Under the circumstances where the external environment will be more complicated and the domestic momentum be moderating, the difficulties in 2019 may be more daunting than last year. In the next step, we need to follow the deployment of the Central Economic Work Conference, maintain strategic focus, tap the economic potential, strive to maintain stable and healthy economic and social development, and greet the 70th anniversary of the founding of PRC with outstanding achievements.

Gao Peiyong, deputy dean and a member of the Faculty of the Chinese Academy of Social Sciences, said that during structural adjustment periods, we must at first avoid to be deviated by changes in the situation. At present, China is in a stage of high-quality development rather than a stage of rapid development. The second is to understand that the main challenge in the high-quality development stage is structural problem. The solution lies in the supply side, and policy making should be based on supply-side structural reform. Taking the current tax reduction policy as an example, the tax reduction should concentrate on corporate sector, with value-added tax cut as the focus, budget reform and reduction of expenditures as the key elements, and expansion of domestic demand and a reasonable increase of Treasury bond issuance as the major support. We need to maintain policy sustainability and durability so as to achieve a longer-lasting policy effect.

In the session of “Understanding the direction of the development of the bond market – the voice of the competent authorities”, Gao Fei, deputy inspector of the Financial Market Department of the People's Bank of China, noted that in 2018, the People's Bank of China and other government bodies successfully enhanced the role of bond market in stabilizing growth, promoting reform, adjusting structure and preventing risks, and strived to promote development of the bond market. The market has been expanded steadily, its ability to service real economy increased, supervision and coordination continuously strengthened, institution and mechanism innovated, and the level of opening up further enhanced. In the next step, the PBC and other relevant authorities will continue to promote the use of existing tools and products, foster market innovation, construct basic systems, improve the level of infrastructure services, enhance the functions of derivatives tools, promote opening up, and strive to make the Chinese bond market an open, inclusive, resilient and internationally competitive market.

Guo Fangming, deputy director of the Treasury Department of the Ministry of Finance pointed out that in 2018, the Ministry of Finance fully implemented the spirit of the 19th National Congress of CPC and achieved positive outcomes in the field of government bond management reform: government bond issuance has maintained good paces; the yield curves of the Treasury bond were further improved; the operation efficiency of the Treasury bond market was further improved; and the reform of the local government bond issuance mechanism made new progress. In 2019, in accordance with the spirit of the 19th National Congress and the Central Economic Work Conference, the Ministry of Finance will further deepen the reform of government bond management and actively adapt to the new era by expanding government bond functions, strengthening the construction of the Treasury bond market, and promoting the reform of the local government bond issuance mechanism. MOF will further sharpen the macro-control tools and strive to deal with the major risks.

Tian Yuan, deputy inspector of the Fiscal and Financial Affair Department of the National Development and Reform Commission, pointed out that based on the spirit of the Central Economic Conference, the current development of bond market and corporate bonds should adhere to the basic principle of serving the real economy, and should firmly hold the bottom line of containing systemic risks. We need to, he noted, increase support for high-quality issuers, promote coordinated supervision, and continue to strengthen the construction of the credit system.

Lu Dabiao, deputy director of the Bond Regulation Department of CSRC, said that Chinese bond market maintained a healthy development in 2018, and it played a good role in supporting the financing of the real economy, securing a sound return on investment in the secondary market, and preventing and controlling credit risks. The CSRC has made great efforts in strengthening supervision coordination, strengthening the daily supervision of the bond market and handling credit risk incidents. In 2019, the CSRC will continue to work with regulators and market players to step up the opening up of bond market, improve the bond default solution mechanism, enhance the liquidity of the bond market, and to increase the efficiency of the bond market.

In the afternoon, the forum explored some hot issues in the market. Yin Jianfeng, deputy director of the National Finance and Development Laboratory and chief economist of Zheshang Bank, gave a keynote speech entitled “Weather the winter”. He analyzed the US economic outlook in light of US monetary policy and economic fundamentals. As for domestic economy, Yin Jianfeng believed that from a historical point of view, the nominal GDP growth rate less than 10% was deemed a recession. In the second and third quarters of 2018, the nominal GDP growth rate fell below 10%. For the real estate market, Yin Jianfeng believed that there are two upside-downs in China's real estate market, that is, the upside-downs of the level of land supply and of housing price increase.

Tang Lingyun, deputy general manager of the Global Financial Market Department of the Industrial and Commercial Bank of China, believed that from the perspective of the global economy, the economic downturn is unpredictable and the competition of big countries will intensify the risk of geopolitical tensions. The global financial environment has in general deteriorated. Domestic economy has stabilized and kept changing, and the downward pressure has increased. The financial institutions face more difficulties, the resources and environment constraints have become broad-based, and the marginal rate of return of capital has entered the downward trajectory. At the same time, the long-lasting low interest rate presents challenges to investment return. Bond market risk exposure is relatively high during certain periods, which means higher requirements imposed on risk management. Financial institutions should seize new opportunities, tackle new challenges, and seek breakthroughs in the course of transformation of financing methods.

 Niu Yurui, deputy general manager of Chinabond Financial Pricing Center, gave a comprehensive analysis of the credit risk prevention under the situation of frequent bond defaults. He pointed out that a total of 125 bonds, with a value of 116 billion yuan, defaulted in 2018, exceeding the sum of defaults of 2014 to 2017. The default bonds have covered all major corporate bond varieties. Therefore, the investor protection mechanism needs to be improved, and the ChinaBond Implied Ratings can reveal the credit risk changes in advance. He recommended the use of ChinaBond Implied Ratings to track the credit risk changes in a timely manner.


In the panel discussion session, Zong Jun, a CCDC chief business officer, presided over the “Six Experts’ Talk on Bond Market” and the panelists discussed some hotspots of macroeconomics, monetary policy, liquidity and bond market investment strategies in 2019.



    Publish on :01/17/2019 09:05
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