Invesco Invests in Zhong Haidan: China's government bonds are officially included in the FTSE Russell WGBI to promote more capital inflows into the onshore market

On October 29, the FTSE Russell World Government Bond Index (WGBI) was officially included in China's bonds. Zhong Haidan, senior account investment manager of Invesco, predicts that the inclusion of China's onshore RMB bonds in the index will continue to drive more capital into the onshore market, and the trend of increasing RMB asset allocation will continue.

Zhong Haidan believes that compared with major markets, the proportion of foreign ownership in China's bond market is still low. Foreign ownership is expected to rise further, making it an asset class increasingly relevant to the world.

Zhong haidan said solid global growth and positive financial conditions support emerging market bonds. Overall support for emerging-market assets will continue as the Fed's expected reduction in asset purchases is to some extent absorbed by the market. Capital flows into emerging markets are expected to benefit Asian and Chinese credit markets due to attractive valuations and solid credit fundamentals.

Zhong Haidan pointed out that China is the world's second largest bond market and has strong liquidity. China's onshore bonds also tend to yield higher than similar bonds in the Global Composite Index. As RMB-denominated bonds are generally less correlated with other markets, it helps international investors diversify their investments. With the inclusion of the FTSE Index, the trend towards increasing RMB asset allocation will continue.