(Yicai Global) March 26 -- Bloomberg LP has decided to include Chinese government and policy-bank securities in the Bloomberg Barclays Global Aggregate Index, online news outlet The Paper reported. The decision comes after the stock markets in both China and the U.S. fell across the board on trade war fears, turning eyes to several safe haven currencies and bond markets.
China bonds will gradually enter the Bloomberg Barclays Global Aggregate Index within a 20-month period starting in April 2019 after the People's Bank of China and the ministry of finance improve supporting measures, the financial data and media company said.
Bloomberg Barclays Global Aggregate Index is one of three global bond indexes. The other two are the World Government Bond Index and the JPMorgan EMBI Global Diversified Index.
After the complete inclusion in the Global Aggregate Index, the yuan-denominated China bonds will be the fourth-largest currency-denominated bonds after those in the dollar, euro and Japanese yen. Bloomberg will include 386 Chinese bonds in Bloomberg Barclays Global Aggregate Index, accounting for 5.49 percent of its market value of USD53.7 trillion, which, is estimated to generate a capital inflow of USD100 billion, based on data on Jan. 31, it said.
Through communication with customers all over the world, Bloomberg found that investors are very interested in the Chinese market, said Peter Grauer, chairman of Bloomberg LP, at China Development Forum in Beijing last weekend. China is advancing in the right direction, and its bonds and stock financing are ready to play a greater role with firm and prudent steps, he added.
China's bond market made great progress in the past year. Therefore, the decision to include the yuan-denominated Chinese government and policy-bank bonds in the Bloomberg Barclays Global Aggregate Index is in response to the expectations of global investors, Grauer said, adding that it is also in recognition of China's continuous efforts to facilitate international investors' participation in its bond market.
China launched the Bond Connect scheme last July, which allows eligible institutional investors in Hong Kong SAR and other countries to buy and sell in the Chinese bond market without a quota.