In March, Citi announced that it will include China in its emerging market and regional government bond indices, as reported. Its three indices, the Emerging Markets Global Bond Index, the Asian Government Bond Index and the Asia Pacific Government Bond, will include Chinese government bonds starting in February next year.
Besides Citi, Bloomberg Barclays also launched two new indices to include Chinese sovereigns: the Global Aggregate + China Index and the Emerging Market Local Currency Government + China Index.
“The inclusion automatically puts [China bonds] on a global index, where the passive money that tracks it has to go in,” said Seth, speaking at a media briefing in Hong Kong.
He believes it will take 12-18 months for a majority of fund managers to adjust their allocations to China bonds and be reflected in the percentage of foreign inflows.