China Bond Traders Brace for Another Retail Volatility Spike

  • Selloff in credit has echoes of November retail withdrawals
  • Asset managers, banks have limited redemptions to cut risks
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China’s biggest corporate credit selloff in five years has traders on tenterhooks for a repeat of November’s sudden slump in government bonds that was exacerbated by the actions of retail investors.

The rise in influence of Chinese individual investors in sovereign securities - a cohort notorious for flipping stocks with abandon - has added a fresh source of volatility to the normally staid world of government bonds thanks to the growth of mark-to-market funds.