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Chinese financial experts pointed out that the most active element of China's capital market in the next three to five years is unlikely to be the second securities board market, but the bond market.
An increasing frequency and amount of bond issues, prolonged terms and innovated issuance all suggest strong growth of the bond market, Wednesday's Economic Information Daily quoted the experts as saying.
The Ministry of Finance on June 6 issued 12 billion yuan in treasury bonds with a term of 15 years, which was a record length for the payment term.
Economists said that this suggests an improved financial regulatory ability of the Chinese government. They predicted that long-term bond issues will be a strong financial guarantee for solutions to major problems in China, such as social welfare system building, state-owned share reduction and capital circulation.
Prior to this, most of China's T bonds have had their payment terms limited to 10 years.
Sources with the ministry said that it will issue a batch of 20- year bonds. The amount has yet been decided, and the interest will be defined through bidding.
The public has responded to frequent bond issues with great enthusiasm. A survey conducted by the People's Bank of China suggested that stock options and bond purchases have become the leading financial products for urban and township residents in the second quarter of the year.
The bond market can amass capital with lower risk than the stock market. In the first half of the year, the global bond market pooled some US$924 billion of capital, while the stock and convertible bond market raised US$102.7 billion, down 50 percent from the same period of last year.
(Xinhua News Agency 07/25/2001)
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