(Yicai Global) June 7 -- China Asset Management's Hong Kong unit kicked off the first exchange-traded fund which gives foreign investors access to China's mainland bond market through the Hong Kong bourse.
The ChinaAMC Bloomberg Barclays China Treasury + Policy Bank Bond Index ETF was listed on the Hong Kong Exchange yesterday, online new outlet Asia Asset Management reported.
The ETF provides investment returns that are closely related to the performance of the Bloomberg Barclays China Treasury + Policy Bank Bond Index. The index reflects the performance of yuan-denominated fixed-rate treasuries and policy bank bonds with a minimum maturity of one year.
China has been taking gradual measures to give further access to overseas bond investors, including launching a Bond Connect scheme last July, with daily quotas. Full inclusion of China's bond index in global bond indexes could bring USD286 billion in passive inflows, Standard Chartered bank said to Reuters in December last year.
China's top-rated government bonds have become the best choice for new investors because of their high liquidity and low credit risks, said Zhang Xiaoling, chief executive of ChinaAMC (HK), adding that the firm sees emerging opportunities in this market and was pleased to select Bloomberg as the benchmark index provider.
The value of outstanding yuan-denominated Chinese government bonds reached CNY12.4 trillion (USD1.9 trillion) as of the end of April, according to data from China Central Depository & Clearing. Foreign institutions held only 6 percent of this number at CNY780.8 billion (USD121.9 billion) worth of such bonds, with their portion increasing 84.2 percent annually.
Following China's operational enhancements in the bond market, the Bloomberg Barclays Global Aggregate Index will include Chinese yuan-denominated government and policy bank securities starting next year, US financial media firm Bloomberg said in a statement in April.
The most liquid types of bonds in China are the government and policy bank bonds, said Norman Tweeboom, head of portfolio & index sales for Asia Pacific at Bloomberg, adding that the new ETF offers a channel for global investors to invest in the world's third-largest bond market with a transparent and low-cost way to trade and seek returns.
Editor: Emmi Laine