China's bond market defies the trend and attracts funds in March, with the trading volume of the Bond Connect Northbound hitting a record high.

The geopolitical conflicts in the Middle East continue to ferment, putting pressure on the Asian fixed income markets. Data from multiple regulatory agencies and bond market associations show that in March, foreign investors withdrew funds from bond markets in several major Asian economies. According to data from the Financial Supervisory Service of South Korea, net outflows from South Korea reached $7.25 billion in March; data from the Indonesian Bond Market Association and the Thai Bond Market Association show that foreign funds flowed out of the Indonesian and Thai bond markets by $1.8 billion and $708 million respectively. Meanwhile, the Chinese bond market is attracting funding, with Bond Connect Limited announcing last week that the monthly trading volume of Bond Connect Northbound reached a record high of 1.22 trillion yuan in March, and the daily trading volume rose to a historical high of 556 billion yuan. Zhao Yaoting, global market strategist for J.P. Morgan in the Asia-Pacific region, recently stated that Chinese assets are increasingly being seen as safe-haven assets. Since the outbreak of the Middle East geopolitical conflicts, the RMB exchange rate and Chinese government bond yields have remained relatively stable. It is worth noting that the correlation between Chinese stocks and bonds has turned positive for the first time in two years, reflecting an influx of capital with safe-haven attributes.