China

China Fixed Income: A welcome addition to the mainstream

China Fixed Income is a richly diverse asset class that’s moving steadily to the investment mainstream. Get up to speed on the asset class and the range of potential benefits it brings to investors’ portfolios in 10 minutes with our short paper.

Jun 11, 2020

10 minutes

China Fixed Income is a richly diverse asset class that’s moving steadily to the investment mainstream. Get up to speed on the asset class and the range of potential benefits it brings to investors’ portfolios in 10 minutes with our short paper.

China’s bond markets cover a large and increasingly diverse opportunity set, offering a range of potential benefits to investors.

The opening of these markets to foreigner investors in recent years has spurred a trend for increased allocations. This shifted up a gear in February, when liquid CNY-denominated China government bonds joined JP Morgan’s suite of emerging market indices.

Although it is growing, exposure to China fixed income is still relatively low in global bond portfolios. Yet the asset class brings various potential benefits to investors’ portfolios, including a higher risk premium relative to other bond markets and a low correlation with other asset classes.

We believe the structural shift of investment allocations towards the asset class is likely to accelerate as China’s debt markets become increasingly integrated into the global mainstream.

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Authored by

Wilfred Wee

Portfolio Manager

Emerging Market Debt Indicator March 2020

Our EM Fixed Income team summarises recent market developments across the EM sovereign debt universe. The team also shares its views on the outlook for EM debt and provides insights into portfolio positioning....

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