Capturing Investment Opportunities in China’s $16 Trillion Bond Market

Bloomberg hosted a virtual event convening senior industry leaders in finance to discuss key investment trends and opportunities in China’s bond market, now valued at $16 trillion and ranked second largest in the world.

Opening the webinar, Head of Asia Pacific at Bloomberg Bing Li described 2020 as “a truly extraordinary year, with greater uncertainty and volatility in global financial markets.” He added that despite these challenges, Bloomberg has seen global investors move quickly to adapt and capture investment opportunities, with the coming of age of China’s bond market, which has become a bright spot.

Keynote speaker Meijing Li, General Manager of RMB Market Department at China Foreign Exchange Trade System (CFETS), attributed the growing demand for China’s fixed income to greater foreign investor participation as well as the inclusion of China bonds into international bond indices.

“The inclusion of Chinese bonds into global major indices reflects growing investor confidence towards the continued opening up of China’s bond market. When China is part of global benchmarks, investors can allocate fixed income assets more rationally and this in turn will impact the internationalization of the RMB,” said Madame Li.

CFETS has been working to improve the infrastructure required for global investor to access China’s bond market, including launching the request for quote (RFQ) service for CIBM-Direct with Bloomberg last month. Since the launch, China Construction Bank Corporation Singapore Branch (CCB Singapore) became the first company to trade through the RFQ service for CIBM-Direct on the Bloomberg Terminal. Ms Ren Dong Yan, General Manager at CCB Singapore, said: “Despite global financial uncertainties in 2020, the China onshore debt capital market remains very attractive to foreign investors. The rollout of Bloomberg’s CIBM Direct RFQ not only provides a more efficient trading alternative to foreign investors but also helps improve the efficiency and transparency of the onshore debt market. This platform will assist CCB Singapore to provide better trading services to our clients with easier access to the onshore debt capital market.”

During the event, experts from CFETS, Bank of China, PIMCO, State Street Global Advisors, CITIC Securities, Fidelity and AllianceBernstein joined in panel discussions to discuss the opportunities and challenges residing in investing in China’s bond market. Panelists recognized that several risks remain but highlighted the appeal and strength of China’s economic recovery. Looking forward, industry experts noted that with improved access channels to China’s bond market, there will emerge opportunities for investors and the sell-side to capture new opportunities.