(Bloomberg) -- Chinese regulators asked some of the nation’s biggest banks to note down a record of the buyers of the sovereign debt that they have sold, a subtle sign that authorities are trying to rein in speculators to cool an unprecedented bond rally.
Financial regulators this week told state-run banks to log the details of the counterparties that purchase long-dated government bonds on a daily basis, said people familiar with the matter, requesting not to be named discussing a private matter. It’s the first time such a request has been made to the lenders involved, the people said.
The National Association of Financial Market Institutional Investors didn’t immediately respond to Bloomberg requests for comment.
Beijing is widening its battle against bond speculators, targeting everything from fund houses to rural banks, in a bid to push government yields higher from record lows. Sinking bond yields have authorities on edge, as any sudden reversal could send shock-waves through the economy.
Authorities have been seeking to limit risks at its financial institutions too, wary of the collapse of Silicon Valley Bank, which had piled into US Treasuries before rates rose.
While the central bank has yet to follow through on its pledge to borrow government bonds and sell them directly in the market, some state lenders unexpectedly sold seven-year bonds this week to push up yields. They also actively sold 10-year notes earlier in the week.
Among other tactics in Beijing’s playbook, regulators were reported to have slowed the approval for new bond funds and local authorities in one of the most affluent provinces asked some rural lenders to suspend trading in sovereign notes.
China is walking a tightrope between supporting growth and trying to rein in a sizzling debt rally that earlier this week send benchmark yields below 2.1% for the first time in history. Though analysts have said any intervention won’t likely yield long-term results as expectations remain high that Beijing will have to trim interest rates further to bolster the economy.
The Bloomberg China Aggregate Total Return Index has risen 4.92% this year, more than double the gain for a similar US gauge.
--With assistance from Qingqi She, Jing Zhao and Iris Ouyang.
©2024 Bloomberg L.P.