China’s bond market to see inflow of US$20 billion in foreign capital as coronavirus sweeps across globe
- JP Morgan includes China bonds in its indexes, following moves by Bloomberg Barclays in April
- China’s debt market still attractive, expert says, despite coronavirus outbreak
The inclusion of China’s government bonds into JPMorgan Chase and Co.’s benchmark emerging-market indexes has opened a floodgate for a capital inflow of US$20 billion into the mainland’s onshore debt market.
On Friday, China began having a 10 per cent weight in JPMorgan’s Government Bond Index-Emerging Markets (GBI-EM)’s global diversified and narrow diversified indexes.
That marked another milestone for the world’s second-largest debt market worth more than 100 trillion yuan (US$14.3 trillion). Bloomberg Barclays added yuan-denominated bonds to its global benchmark last April.
“The inclusion that helps direct more fund inflows into the bond market represents a win for China as a result of the increasing profile of its economy and currency,” said Gu Weiyong, chief investment officer at Shanghai-based asset manager Ucom Investment. “The economic woes amid the coronavirus epidemic is unlikely to deter international investors from allocating additional funds to buy Chinese bonds.”
A consensus among analysts is that the inclusion will lead to an inflow of US$20 billion to the mainland bond market.