(Yicai Global) March 5 -- Chinese government bonds continue to be highly attractive to overseas institutional investors despite a recent uptick in US treasury yields and the selloff of other major economies' government bonds, a senior analyst at US asset manager JP Morgan Asset Management said.

Higher interest rates are a big factor, Chief Asia Market Strategist Tai Hui told Yicai Global. The current yield on a 10-year Chinese government bond is around 3.3 percent. Another advantage is their lower correlation with swings in US treasuries and US inflation expectations, he added.

The top asset on JP Morgan's Global Bond Opportunities Fund, taking up 8.7 percent of the portfolio, is a Chinese government bond due to mature on Nov. 19, 2030, according to Yicai Global research.

"We therefore believe the case for investment in Chinese yuan bonds remains strong,” Tai said. Investors will certainly keep a close eye on the People's Bank of China, watching for the latest moves on market liquidity management and monetary policy, he added.

"We remain bull on emerging markets' local currency bonds, especially the yuan bond," said Luca Paolini, chief strategist at Switzerland’s Pictet Asset Management. "According to our assessment, yuan bonds are still the cheapest asset class, and the appreciation of the yuan may be an additional return," he added.

“We mostly trade bonds on a range-band basis and expect the yield on the 10-year Chinese government bond to fluctuate around 3.3 percent and 3.35 percent,” Paolini said.

Editors: Tang Shihua, Kim Taylor