Bloomberg began adding Chinese government bonds and policy bank securities to its Bloomberg Barclays Global Aggregate index on Monday, kicking off inflows of up to $2tn that will reshape global capital markets.
The phased inclusion of 363 Chinese securities over the coming 20 months should lead to about $2tn of fund inflows into China’s onshore debt market, according to Moody’s. Foreign holdings of onshore domestic bonds came to just $250bn at the end of January, or about 2 per cent of the outstanding total.
"Purely from the weight of money and the shift in global capital markets, this is the biggest change in global capital markets that we have seen for some time, and we believe it is something that all investors should be paying attention to”, said Hayden Briscoe, Asia-Pacific head of fixed income at UBS Asset Management.