Chinese Bond Market Bucks Stock Rally: Investors Brace for 2025
Investors in Chinese bonds anticipate a subdued economic recovery by 2025, diverging from equities that bet on consumer revival. Persistently low bond yields and weak growth outlook reflect skepticism about sustained market gains, despite recent Chinese stimulus measures.
Investors in Chinese bonds are positioning for an underwhelming economic recovery by 2025, standing in contrast to the equity market, which anticipates a rebound in consumer spending. Ten-year bond yields nearing historic lows reveal a deep-seated pessimism about China's growth prospects.
UBS strategist Bhanu Baweja notes that while the stock market may rally, the bond market remains unconvinced of a long-term earnings-based recovery. This skepticism is mirrored by low inflation expectations and a banking system inundated with cash, leading to subdued growth forecasts.
Despite efforts by the Chinese government to stabilize financial markets and foster growth, bond yields continue to plummet. As domestic credit demand softens and foreign investors pull back, the bond market rally faces minimal resistance, according to industry analysts.
(With inputs from agencies.)
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