China’s Bond Market Reaches a Tipping Point
The inclusion of yuan-denominated securities in the Bloomberg Barclays Global Aggregate Index shows growing confidence by international investors.
Preparing to soar.
Photographer: Qilai Shen/Bloomberg
For those who watch China closely, there has never been a more pivotal moment in the evolution of its economy and financial markets. More than 40 years since the start of its “Reform and Opening Up” process, and despite the volatility in U.S.-China relations, China’s commitment to market reform remains. This year will likely see the improvement of market access and the rise of new investment opportunities.
The progress with these reforms in China’s $13 trillion bond market is the latest cause for market optimism. Now the third largest in the world, it remains relatively unexplored by global investors. Times, of course, are changing. Once solely the domain of domestic investors, later joined by central banks and sovereign wealth funds, the market is now encouraging a new wave of international investors. China’s broad and diversified bond market is an opportunity they can no longer ignore.