J.P. Morgan Flagship Indexes to Include China Bonds

ZHANG YUSHUO

(Yicai Global) Sept. 5 — Liquid Chinese government bonds (CGBs) are set to be included in J.P. Morgan Chase’s flagship indexes over a 10 month period starting from Feb. 28, 2020, according to a statement the New York-based investment bank released yesterday.

Nine eligible CGBs will be included in the indexes from Feb. 28, 2020, comprising six instruments already issued in the market and three new issues expected between next month and December.

The most significant impact relates to the Government Bond Index-Emerging Markets (GBI-EM) family of indexes: GBI-EM Global Diversified (GBI-EM GD), GBI-EM Global, GBI-EM (Narrow) and GBI-EM (Narrow) Diversified. The GBI-EM GD index accounts for USD202 billion of the USD226 billion benchmarked to the GBI-EM family of indexes and a 10 percent weight cap for China will apply to it.

“The inclusion represents an important milestone as China continues to liberalize its capital markets and looks to connect more global investors to the country,” said Mark Leung, chief executive of J.P. Morgan China.

Bloomberg included Chinese government and policy-bank securities in its Bloomberg Barclays Global Aggregate Index in April, when the value of bonds managed by overseas institutions immediately rose by 1.24 percent per month, a much higher percentage gain than in the previous three months.

By the end of August, the value of bonds held by China bond market for overseas institutions reached CNY1.7 trillion (USD238 billion) in a nine-month increase since December, China Securities Journal reported, citing statistics from the China Securities Depository and Clearing under the China Securities Regulatory Commission.

China is one of the few major economies where risk-free bond yields are still above historic lows, making it attractive to foreign investors, experts said.

Editor: Ben Armour