China’s government bonds to be added to FTSE Russell’s trillion dollar WGBI in 2021
- FTSE Russell will add Chinese government bonds to its flagship World Government Bond Index (WGBI)
- The bonds will be included on the index from October 2021, pending confirmation in March 2021
FTSE Russell will add Chinese government bonds to its flagship World Government Bond Index (WGBI), the index provider said on Thursday, paving the way for billions of dollars of inflows into the world’s second-largest economy.
The Chinese government bonds will be included on the index from October 2021, pending confirmation in March 2021. The addition will be phased into the index over a period of 12 months.
“Since being placed on the watch list, the Chinese authorities have implemented significant improvements to the fixed income market infrastructure, facilitating easier participation by international investors,” FTSE Russell said in a statement.
Because the Chinese domestic monetary policy is not that closely linked with global monetary policy, you do get diversification benefits allocating to [yuan] bonds
The index includes mostly developed economies and is a major step for Chinese bonds as investors seek safe-haven assets in a zero-interest-rate world.
“Because the Chinese domestic monetary policy is not that closely linked with global monetary policy, you do get diversification benefits allocating to [yuan] bonds,” said Binay Chandgothia, managing director and portfolio manager at Principal Global Investors in Hong Kong.
Chinese government bonds are already a part of the JPMorgan and Bloomberg Barclays index suites, but the FTSE WGBI has a far larger passive band of investors following it.
