BEIJING, Feb. 1 (Xinhua) -- The Chinese RMB-denominated government bond and policy bank bond will be added to the Bloomberg Barclays Global Aggregate index and the addition will be phased in over a 20-month period starting April 2019, according to Bloomberg on Thursday.
When fully accounted for in the index, the local currency Chinese bonds will be the fourth largest currency component following the US dollar, euro and Japanese yen, said Bloomberg.
The inclusion of the Chinese bonds in the international major bond index fully reflects the confidence of international investors in the Chinese economy and is also a manifestation of new progress in the opening-up of China's financial market, which is conducive to better meeting the international investors' allocation of RMB assets, said the People's Bank of China (PBOC), China’s central bank.
According to statistics as of January 24, a total of 363 Chinese bonds will be included in the index. When fully included, the Chinese bonds will account for 6.03 percent of the market value of the index (54.07 trillion U.S. dollars).
Industry insiders note that once the Chinese bonds are included in the index, institutional investors tracking the index need to invest in the Chinese bond market, according to the inclusion proportion.
It is preliminarily estimated that about 100 billion U.S. dollars will flow into the Chinese bond market gradually.
In addition to the Global Aggregate index, the Chinese RMB-denominated bonds will be included in the Global Treasury and EM Local Currency Government Indices starting April 2019, said Bloomberg.
Earlier, in March 2018, Bloomberg announced to include the Chinese bonds in the index starting from April 2019, once several planned operational enhancements are implemented by the country.
Bloomberg said recently that the Chinese authorities have completed a series of improvements needed for the inclusion of the Chinese bonds in the index.
The PBOC has been adapting to the requirements of foreign investors and constantly optimizing the institutional arrangements for foreign institutional investors to enter the Chinese bond market, said Pan Gongsheng, deputy governor of the PBOC, at a recent international forum about the Chinese bond market.
Li Minhong, vice president of Deutsche Bank (China), said that the Chinese bonds' inclusion in the global important index for the first time has reflected the acceptance and recognition of RMB assets as investable assets in the international market. This will greatly promote foreign investment in the RMB bond market, and accelerate the RMB internationalization.
Data shows that as of the end of 2018, China's bond market reached 86 trillion yuan, of which international investors held nearly 1.8 trillion yuan bonds, a year-on-year increase of 46 percent. Foreign investors held 2.3 percent of the total bonds and 8.1 percent of the government bonds on China's bond market. (Edited by Hu Pingchao, hupingchao@xinhua.org)
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