Central Huijin Investment Ltd., a financial investment company established by the Chinese government, has reached an all-time high in bond issuance this year. According to sources cited by international media, Central Huijin recently issued an additional 15 billion yuan (approximately $2.1 billion) of the “24 Huijin MTN007” and 9 billion yuan (around $1.26 billion) of the “24 Huijin MTN006” notes. This brings their total bond issuance for the year to 207 billion yuan (about $29.09 billion), marking a new annual record. Observers speculate that these funds may flow into the stock market.
Bloomberg reported that as the People’s Bank of China increases its support for the stock market, Central Huijin serves as another key stabilizing force, continually replenishing its resources from the bond market.
Data from Bloomberg reveals that Central Huijin’s bond issuance in the first three quarters has doubled compared to the same period last year. Before the People’s Bank announced new monetary policy tools to support the stock market in late September, Central Huijin, representing the “national team,” had already begun purchasing shares in state-owned banks and the CSI 300 ETF.
This year, China’s bond market overall has seen an upward trend, and Central Huijin bonds, viewed as quasi-sovereign credit, are in high demand. This dynamic further enables Central Huijin to channel more funds into the stock market for stabilization purposes.
As of the end of the first half, Central Huijin’s semi-annual report showed that its financial assets designated for trading rose significantly from 119.3 billion yuan (about $16.77 billion) at the end of last year to 581.8 billion yuan (approximately $81.78 billion). Additionally, short-term borrowings reached 510.5 billion yuan (around $71.76 billion), an increase of over eight times from 60 billion yuan (about $8.43 billion) at the previous year’s end. This substantial rise in both liabilities and trading financial assets aligns with their strategies of issuing bonds in the public market and investing in ETFs.
According to DBS Bank strategist Zhang Weiliang, given the low financing rates in renminbi and the attractive valuations of Chinese stocks, investors like Central Huijin may have previously raised funds in the bond market to invest in equities. Should state-led stock purchases expand, risk sentiment could further heat up.
