A leading benchmark of global government bonds has announced the inclusion of China starting from 2021.
FTSE Russell said on 25 September that it will include Chinese government bonds in its World Government Bond Index starting from October 2021.
The move marks the inclusion of Chinese government bonds in a third leading benchmark, following their inclusion in the Bloomberg Barclays Global Aggregate Index in April 2019 and the JPMorgan Government Bond Index-Emerging Markets in February 2020.
Analysts expect the inclusion of Chinese government bonds in the FTSE Russell index to attract at least an additional USD$100 billion to the market.
Ben Powell, BlackRock Investment Institute’s chief investment strategic for Asia Pacific, told CNBC that the move was an “important landmark in China’s…internationalization of their domestic financial markets.”
Powell said that 10-year Chinese government bonds provided returns which were “very high…in the global context,” with yields of around 3% at present.
Beijing has continued to drive the participation of foreign investors in the domestic bond market, with the issuance of several related measures by the Chinese central bank in September.
Data from the Chinese central bank indicates that China’s bond market is the world’s second largest, with a bond market balance of 108 trillion yuan (approx. USD$15.28 trillion) as of 3 July 2020.
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China’s Bond Market Currently World’s Second Largest at USD$15.28 Trillion: PBOC