China bond market capitalization has become the third largest in the world – valued at $13 trillion after the U.S. and Japan. The recent addition of Chinese onshore securities to the Bloomberg Barclays Global Aggregate Index gives global investors easier and more reliable access to the domestic bond market.
China bond market
The phased inclusion – spanning 20 months – will admit 364 Chinese government and policy bank bonds starting April 2019, accounting for 6.1 percent of the $54.9 trillion debt covered by the index. When fully implemented in the Global Aggregate Index, local currency Chinese bonds will be the fourth largest currency component following the US dollar, euro, and Japanese yen. Up to $100 billion of foreign inflows is expected to flow into Chinese debt market in the 12 months after China’s sovereign and policy-bank bonds joined the Bloomberg Barclays Global Aggregate Index, according to Société Générale.
With increased interest to invest in Chinese bond market, regulatory scrutiny of accounting and valuation practices increases, disclosure requirements become more stringent and pricing transparency becomes necessary. Europe and the US have already witnessed the need for valuations to be independent and transparent driven by a range of regulations
Need for consistent pricing
Obtaining consistent end-of-day pricing data remains a challenge for portfolio managers, traders, and offshore investors worldwide.
Fund managers can get pricing information from local Chinese vendors. However, consistency in pricing methodology and lack of transparency can be limited. Having a single credible and consistent source for bond pricing driven by internationally accepted valuation practices can help address these challenges for global fund managers looking to invest in onshore Chinese bond market.
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China bond market capitalization has become the third largest in the world – valued at $13 trillion after the U.S. and Japan. The recent addition of Chinese onshore securities to the Bloomberg Barclays Global Aggregate Index gives global investors easier and more reliable access to the domestic bond market.China bond marketThe phased inclusion – spanning […]