September 30, 2016

Deutsche Bank survey reveals fixed income investors poised to significantly increase allocations to China’s domestic bond market

Deutsche Bank today released findings of a survey of fixed income investors representing an estimated US$ 14.5 trillion in global AUM and over US$ 5.1 trillion in fixed income AUM. Feedback was primarily provided by senior investment professionals from global asset management firms who are based in Asia. The aggregate share of survey respondents’ Asian local currency bond portfolio allocated to onshore Renminbi (RMB) bonds is seen increasing from roughly 5% at present to almost 13% a year from now, rising further to over 26% in five years’ time.

With respect to the nascent Panda bond market (onshore Renminbi bonds issued by non-Chinese entities) in particular, nearly half of respondents indicated they may invest within the next 12 months, with a further 38% expecting to invest in 1-3 years’ time.

At the end of August, the amount of outstanding bonds in China’s domestic RMB bond market stood at RMB60.2 trillion according to Deutsche Bank research, with the interbank bond market (CIBM) representing more than 90% of the total market. Deutsche Bank research estimates that foreign investors’ share of domestic interbank holdings was about 1.52% in August.

Deutsche Bank Asia Pacific Head of Global Markets Michael Ormaechea reflected on the survey results, “We have been keenly focused on this market and the tremendous opportunity it represents due to its sheer scale and the diversification benefit it offers global investors. Investor interest and readiness to allocate to onshore RMB bonds as borne out by the survey has exceeded our own expectations. Now that access has opened up substantially for offshore investors, we expect foreign participation in China’s domestic bond market to accelerate and for onshore Renminbi bonds to be an increasingly important component of major global fixed income investors’ portfolios.”

The challenge investors most frequently cited in limiting investment in onshore RMB boflagged that the absence of onshore RMB bonds from major indices as a limitation, but 82% expect inclusion in a major emerging market fixed income index to happen within the next two years.

Over half of survey respondents indicated that the shift to a registration-based, quota-free system for CIBM market access had brought forward their institution’s timeline for increasing investment in the market.

Feng Gao, Deutsche Bank Chief Country Officer for China remarked, “The opening of China’s domestic bond market has been a watershed moment for Renminbi internationalization. Adoption of the Renminbi as a currency for trade has been well established; freer access for global investors to such an enormous pool of investable assets is key in unlocking the potential of the Renminbi as a currency for investment as well.”

For further information, please contact:

Deutsche Bank AG
Press & Media Relations

Amy Chang
Phone: +852 2203 8434
E-mail: amy.chang@db.com

Grace Zhang
Phone : +86 10 5969 8617
E-mail : grace.zhang@db.com


About Deutsche Bank

Deutsche Bank provides commercial and investment banking, retail banking, transaction banking and asset and wealth management products and services to corporations, governments, institutional investors, small and medium-sized businesses, and private individuals. Deutsche Bank is Germany’s leading bank, with a strong position in Europe and a significant presence in the
Americas and Asia Pacific.

Deutsche Bank in China

Deutsche Bank first established a presence in China in 1872 with the opening of its first overseas office in Shanghai. Headquartered in Beijing, Deutsche Bank China completed local incorporation in 2008, currently with branches in Beijing, Shanghai, Guangzhou, Tianjin, Chongqing, Qingdao, and a sub-branch in China (Shanghai) Pilot Free Trade Zone. Deutsche Bank has a regional hub in Hong Kong SAR, which celebrated its 50th year of operation in 2008. The bank also maintains securities representative offices in Beijing and Shanghai.

Through rapid organic growth and strategic investments, Deutsche Bank’s core global businesses are all active in China. These include corporate advisory and capital markets, transaction banking, as well as wealth management.

On the asset management front, Deutsche Bank holds a 30% strategic investment in Harvest Funds Management – one of the country’s leading investment managers.

In July 2009, the joint venture between Deutsche Bank and Shanxi Securities – Zhong De Securities Co. Ltd. – received a securities business license from the China Securities Regulatory Commission (CSRC). Zhong De Securities is currently approved to underwrite and sponsor stocks and bonds (including A-shares, foreign investment shares, government bonds, and corporate bonds), as well as provide corporate advisory services in the domestic capital market. Deutsche Bank holds a 33.3% ownership in the joint venture.

For more information about Deutsche Bank China: https://china.db.com.

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