SHANGHAI: Inclusion of Chinese government bonds in global index provider FTSE Russell’s FTSE World Government Bond Index later this month is expected to boost demand for bonds from the country, experts said.
The London-headquartered index compiler said in September that it would include Chinese sovereign bonds in its index, the details of which will be confirmed at the end of this month.
Liu Jie, head of China macro strategy at Standard Chartered Bank, said in a recent report that the initial weighting of the Chinese government bonds in the FTSE WGBI will be about 5.2%, helping uphold the yuan exchange rate. Upon the official inclusion this October, between 130 billion yuan (US$20bil or RM82bil) and 150 billion yuan of passive investment is expected to flow into the Chinese bond market within a year, according to Liu.
Once successfully added in FTSE’s flagship index, Chinese government bonds will be included by all the world’s three major index providers. The other two are the Barclays Global Aggregate Index and the JPMorgan Government Bond Index-Emerging Markets in which the Chinese government bonds were included in April 2019 and February 2020..
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