China’s 50-Year Bond Auction Draws Least Demand Since 2009

China’s 50-Year Bond Auction Draws Least Demand Since 2009

China’s sale of 50-year bonds drew the least demand since the country began issuing the securities in 2009 as economic growth slows and investors brace for a reduction in U.S. monetary stimulus. The Ministry of Finance sold at least 20 billion yuan ($3.3 billion) of notes due 2063 paying 5.31 percent, the highest yield since the nation started selling the tenor. A Bloomberg survey of five traders and analysts forecast a rate of 5.05 percent. The government received just 30.2 billion yuan in bids, compared to 42.6 billion in May, when the securities sold to yield 4.24 percent.Concerns the country’s economy is slowing and speculation the U.S. Federal Reserve will scale back stimulus have sent yields on China’s local currency bonds surging this year. Government notes pay an average 4.52 percent, the most since 2005, according to JPMorgan Chase & Co. index data.

“There are concerns about growth, reforms, other things, and you have a backdrop of negative risk ahead with tapering,” Win Thin, the global head of emerging-market strategy at Brown Brothers Harriman & Co. in New York, said in a telephone interview. “As tapering expectations pick up, emerging markets get whacked, not just in currencies, but in local bonds as well. That duration is incredibly long, so that’s even riskier. The long end is going to take the brunt of the weakness.”

China’s government today vowed to ease the country’s one-child policy, expand farmers’ land rights and encourage private investment in state businesses as part of the most sweeping changes since the 1990s, as it seeks to find new sources of growth while sustaining its grip on power.

To contact the reporter on this story: Boris Korby in New York at

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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