JP Morgan adds China bonds to GBI-EM index

Tiananmen_squareJP Morgan has begun adding China’s government bonds to its Government Bond Index Emerging Markets (GBI-EM). The move, which started on February 28, 2020, will eventually result in a 10% weighting for China in the flagship Global Diversified Index, which is tracked by investors managing more than US$200 billion. According to JP Morgan, the inclusion of Chinese onshore bonds to the GBI-EM could translate into US$3 billion of fresh inflows per month. “The inclusion reflects global investors’ demand for Chinese bonds, following the country granting access to its domestic market and removing a previous quota system,” Ming Leap, associate director – fixed income at HSBC Global Asset Management wrote in a statement. “The stability of the renminbi versus other emerging market currencies, the high credit rating and the generous yields offered by Chinese government bonds have attracted increased interest from international investors, particularly at a time when nearly a quarter of the global bond market is offering negative yields. “Steady money flows from passive and active bond investors who manage against the GBI - EM Global Diversified index should become an anchor of stability for the Chinese bond market,” she added. In January, China’s finance ministry announced that it would allow foreign banks to join underwriting groups for local government bonds. © 2020 funds globla asia

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