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Friday, June 21, 2024

Insurance firms, banks hold lion’s shares of G-bonds

By Dat Thanh

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HCMC – Insurance firms and banks continue to dominate the G-bond market, collectively holding 99.4% of outstanding bonds as of late 2023, the Asian Development Bank (ADB) said in a report.

The Asian Bond Monitor report said that insurance companies remained the largest investor group, with their holdings increasing slightly to 59.7% compared to 58.9% the previous year.

Banks saw a slight decline in their share, dropping to 39.6% over the same period.

This concentration of holdings underscores the dominance of these two investor groups in the G-bond market, resulting in the highest Herfindahl–Hirschman Index (HHI) score among regional peers by the end of December 2023.

In the context of the G-bond market in Vietnam, a high HHI score indicates that the market is dominated by a small number of major players.

The report also showed a decline in G-bond yields for most tenors between December 1, 2023, and February 29, 2024. This trend occurred amidst uncertainties over whether the U.S. Federal Reserve cuts federal funds rates.

The State Bank of Vietnam has maintained steady rates since July 2023 to support economic growth after it slashed the refinancing rate by 150 basis points from April to June.

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