Citi Fixed Income Indices recently announced the eligibility for inclusion of Chinese onshore bonds to its emerging markets and regional government bond indices. This sees the expansion of the World Government Bond Index family with two new indices, the World Government Bond Index – Developed Markets (WGBI-DM) and the World Government Bond Index – Extended (WGBI-Extended) to complement the existing World Government Bond Index. This change was in response to the further opening of the China Interbank Bond market for eligible foreign institutional investors.
“We are pleased to see regulatory changes that enable market access, allowing us to reflect and provide new investment opportunities in our indices,” said Arom Pathammavong, Global Head of Citi Fixed Income Indices. He added, “We recognise the importance of appropriate market representation of our family of indices and are excited to grow our WGBI index family to suit investors’ needs.”
After an extensive review which included consultations with market participants, Citi concluded that China was eligible to join three existing government bond indices – the Emerging Markets Government Bond Index (EMGBI), Asian Government Bond Index (AGBI), and the Asia Pacific Government Bond Index (APGBI). With all indices, the impact on price will be determined by the relative importance, relevance and scale of use that the current indices in question currently have. What is clear is that the Chinese bond market is starting to become more relevant and a more realistic investment option for institutional investors than was previously the case.