(Yicai Global) June 30 -- Highly-anticipated China Bond Market is boosted by some good news before the "Bond Connect" mechanism between mainland Chinese bonds and Hong Kong is unveiled. Citi in China that Citigroup Inc. (Citi) set up two indices for Chinese onshore market and said it will include China in the World Government Bond Index – Extended / WGBI-Extended. 

Currently, the international bond indexes include Citi WGBI, JPM GBI-EM and Bloomberg Barclays Global aggregate index, in which Citi WGBI has the largest scale of assets management. By estimation, assets worth of USD 2-4 trillion follow this index. 

Citi's two new bond indices are The Citi Chinese (Onshore CNY) Broad Bond Index and The Citi Chinese (Onshore CNY) Broad Bond Index –Interbank. 

China is gradually opening bond market to the world. It has further opened interbank market to overseas institutional investors since February 2016. This is the largest bond trading market in China. 

The Central Bank of China and Hong Kong Monetary Authority jointly issued a document to approve "Bond Connect" in May 2017. In the initial stage, investors from Hong Kong and other foreign countries will be allowed to invest in interbank bond market of Chinese mainland via Hong Kong without restriction on investment amount. Rules on overseas investment for Chinese investors will be released in due time. 

Kenneth Ho, who is in charge of Goldman Sachs Asia strategy research unit, said in a research report released earlier this month, "Over USD1 trillion's global fixed-income investment fund is expected to be allocated to China Bond Market in the next 10 years."