FOREIGN investors increased their holdings of Chinese bonds for a ninth consecutive month in November, adding to positions in government bonds and some policy bank bonds as a domestic selloff led to a surge in yields.

Holdings of Chinese treasury bonds by overseas investors rose 14.4 billion yuan in October to 573.5 billion yuan (US$86.66 billion), according to calculations based on data from China Central Depository and Clearing Co. (CCDC), the country’s primary clearing house.

After reducing them in October, offshore investors increased their holdings of Chinese policy bank bonds by 1.84 billion yuan to 316.4 billion yuan. Total offshore holdings of all Chinese bonds cleared by CCDC rose by 15.3 billion yuan in November to 936.6 billion yuan.

Following a surge since August, holdings by offshore institutions of negotiable certificates of deposit (NCD), a type of short-term debt popular among smaller banks, fell by 15.7 billion yuan in November to 139 billion yuan, separate data released by Shanghai Clearing House showed.

Gary Ng, an economist at Natixis in Hong Kong, said the decline might reflect a maturity wall as NCDs come due. But he added that high yields would continue to make them attractive to investors.

Data from the website of the China Foreign Exchange Trade System (CFETS) showed more than 2.2 trillion yuan in NCDs will come due in December, about 6 percent of the total value of all NCDs ever issued.

The yield on three-month AAA-rated NCDs was 4.9802 percent Friday.

Fears over the impact of a government campaign to reduce excessive financial risk drove yields on government and policy bank bonds to their highest levels in three years in November, lifting yields across the domestic bond market.

(SD-Agencies)