Inclusion of Chinese bonds in Bloomberg Barclays index to spur trading via HKEX connect scheme
- Turnover of yuan-denominated bonds traded through the HKEX’s connect scheme rose to 7.8 billion yuan on April 1 from an average of 6 billion yuan in the first quarter
Turnover in Chinese bonds traded through the Hong Kong Exchanges and Clearing’s bond connect scheme is set to rise further after yuan-denominated bonds were included in a widely tracked global bond index.
The inclusion of Chinese government bonds and bank securities in the Bloomberg Barclays Global Aggregate Bond Index was announced on February 1, but it came into effect on April 1.
On Monday, turnover of Chinese bonds traded through the bond connect scheme rose to 7.8 billion yuan (US$1.16 billion), up from the daily average of 6 billion yuan in the first quarter, and 5 billion yuan last year. The bond connect’s average daily turnover in February was 6.48 billion yuan, up about 8 per cent from 6.01 billion yuan in January.
“The inclusion of mainland bonds into the index is another important milestone as China continues its financial market liberalisation,” Charles Li Xiaojia, chief executive of the HKEX, told the RMB FIC Pan-Asian Conference in Hong Kong on Tuesday.
ANZ estimates potential foreign fund inflows of at least US$150 billion over the next 20 months from asset managers tracking the bond index.