FTSE Russell moves forward with inclusion of Chinese government debt in flagship index as world’s second-largest bond market opens to foreigners
- Chinese sovereign debt to be added to World Government Bond Index in October over three years
- Inclusion would usher in US$150 billion to US$180 billion of new inflows into Chinese bond market this year, says Goldman Sachs
FTSE Russell said on Tuesday that it would go ahead with its plans to include Chinese sovereign debt in a flagship government bond index beginning in October, marking the latest milestone in the opening up of China’s US$16 trillion bond market to foreign capital.
The index provider, owned by the London Stock Exchange Group, said it would add Chinese sovereign debt to its World Government Bond Index over three years. China’s weight in the index will be around 5.25 per cent, the sixth largest following the US, Japan, France, Italy and Germany.
“The decision to add the second-largest bond market in the world to our flagship global government bond index reflects our robust index governance process and regular engagement with global investors, regulators and other key market participants,” Waqas Samad, FTSE Russell’s CEO, said in a press release.
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The index provider said it had studied recent reforms to make international investors’ participation in Chinese bond markets easier following its decision not to include Chinese debt in its government bond index two years ago.
Investment bank Goldman Sachs said on Tuesday it was raising its forecast for inflows into Chinese debt to between US$150 billion and US$180 billion this year, from US$120 billion to US$140 billion before FTSE Russell’s announcement.