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Foreign investors held a record 88.3 billion yuan of negotiable certificates of deposit at the end of August, up from 24.5 billion yuan a month earlier, Bloomberg reports, citing Shanghai Clearing House data. At the same time overseas institutions added government bond holdings at a slower pace in August than the month before.

“NCDs are the highest yielding short-dated bonds among major types of onshore debt, and with limited credit risks,” Becky Liu, head of China macro strategy at Standard Chartered was quoted as saying. “We expect foreign holdings will increase further. Under the current environment, there still lacks a strong catalyst for long-dated bond yields to move lower, thus limiting capital gains.”

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