BEIJING, March 30 (Xinhua) -- FTSE Russell, a global provider of indices, affirmed Tuesday the inclusion of Chinese government bonds (CGB) into its flagship FTSE World Government Bond Index (WGBI) starting from October 29 this year, reported Xinhua-run Xinhua Finance.
Russell made the confirmation in a news release, saying that the inclusion will be gradually completed in a period of 36 months to ensure orderly transition of markets and investors, with the weighting of CGB in the WGBI at 5.25 percent.
The pledged inclusion hereby marked inclusion of CGB into the three global benchmark bond indices after the gradual inclusions of CGB into the Bloomberg Barclays Global Aggregate Index (BBGA) since April 2019 and Government Bond Index Emerging Markets (GBI-EM) suite of JPMorgan since February 2020.
Currently, there are about 3-5 trillion U.S. dollars of assets tracking the three indices and on basis of the 5-10 percent weightings of CGBs and Chinese policy bank bonds, around 200-300 billion U.S. dollars of capital is expected to flow into China bond market, let alone the active funds tracking the three indices or taking them as investment benchmarks, according to market players.
As Standard Chartered predicted, FTSE Russell's inclusion of CGB into the WGBI is likely to prompt further capital flows into China's bond market and consolidate the exchange rate of Chinese yuan.
Within the 12 months after October this year, there may be 2.5-3 trillion U.S. dollars of assets tracking the WGBI and 130-156 billion U.S. dollars of capital is anticipated to be brought for Chinese government bonds.
By the end of February, foreign institutional investors held 3.5671 trillion yuan of China bonds, of which 414.6 billion yuan of bonds were under custody of Shanghai Clearing House and 3.1525 trillion yuan were under custody of China Central Depository & Clearing Co., Ltd. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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