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Macro · Govt · Markets · Bond
International bond indexes keep adding Chinese govt bonds, foreign funds salivating on China’s USD 13.8 trln bond markets
2020/02/28 09:26:25

Feb 28, 2020 (China Knowledge) - From Feb 28, nine China’s government bonds that will be included in the JP Morgan Government Bond Index - Emerging Markets. After inclusion of China’s government bonds and policy-bank bonds in the Bloomberg Barclays Indices, it is the second time these are factored into international index.

Yesterday’s the selected bonds will be included in several benchmark bond indexes, and the inclusion will be carried out step by step over a span of 10 months. Besides this, the weightage of these Chinese bonds will reach the upper limit of 10% in the GBI-EM Global Diversified and GBI-EM (Narrow) Diversified.

In terms of trading volume, last year’s foreign institutional investors traded a total of RMB 5.3 trln in bond options, with a YoY increase of 66%, accounting for 2.6% of the market’s total volume for the same period last year. Just Jan alone, it reached a total of RMB 558.2 billion, accounting for 4% of the total market volume over the same period last year.

It is very obvious China's bond market has disproportionate foreign capital, and it is far below the level of developed countries occupying between 20% and 40%, the market is yet to usher in trillions of U.S. dollars compare to its current USD 13.8 trln size.

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