HOLDINGS of yuan-denominated bonds by offshore investors topped 2 trillion yuan for the first time in July, official data showed, as the inclusion of Chinese bonds in a major global index supported flows into the market.

Offshore investors held Chinese interbank market bonds worth a total of 2.02 trillion yuan (US$286.04 billion) at the end of July, according to calculations using data from interbank market bond clearing houses China Central Depository and Clearing Co. (CCDC) and Shanghai Clearing House.

Total holdings of Chinese government bonds by offshore investors stood at a record 1.17 trillion yuan at the end of July, the data showed.

Worries over a prolonged trade spat between the United States and China have helped to drive Chinese bond prices to multi-year highs as investors seek products to hedge against the risk of a stock market collapse.

On Friday, the yield on 10-year Chinese government bonds touched 3.019 percent, according to Refinitiv data, its lowest level since Dec. 5, 2016. Bond yields move inversely to prices.

In April, the Bloomberg Barclays Global Aggregate Index began including Chinese government bonds and policy bank bonds, issued by China Development Bank, Agricultural Development Bank of China and Export-Import Bank of China. The 20-month phased inclusion of Chinese bonds will take China’s weight in the index to 6.03 percent.

Data released earlier this month from the bond connect program, which offers access to the mainland’s onshore interbank market through Hong Kong, showed trading volumes hit a record high of 201 billion yuan in July, though daily turnover fell to 8.74 billion yuan from 9.06 billion yuan in June. (SD-Agencies)