The anticipated inclusion of Chinese government bonds in a major global index could draw an additional $140 billion into Chinese bonds, Goldman Sachs estimates, potentially offering a further boost to the yuan as China opens its capital markets.
FILE PHOTO: Investors look at computer screens showing stock information at a brokerage house in Shanghai, China, April 21, 2016. REUTERS/Aly Song/File Photo
In a note on Tuesday, Goldman Sachs analysts Danny Suwanapruti and Maggie Wei said $140 billion was based on an estimated weighting of 5.7% and an assumption of assets under management of around $2.5 trillion tracking WGBI. “From a flow perspective, FTSE will likely be the most impactful index since it has a large AUM tracking this index ... its investors base is very passive and comprises just government bonds,” they said.
The Bloomberg Barclays Global Aggregate Index began a 20-month phased inclusion of Chinese government and policy bank bonds in April 2019, and J.P. Morgan began its 10-month inclusion process for Chinese government bonds in its Government Bond Index Emerging Markets suite in February.
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