In comprehensive news, British index provider FTSE Russell’s plan to include Chinese government bonds and policy bank bonds in the FTSE Global Government Bond Index (WGBI) in October this year has attracted widespread attention around the world.
According to Reuters, Goldman Sachs, an international investment bank, predicts that once Chinese bonds are included in the FTSE index, investment inflows into the Chinese bond market will double from the original US$5-10 billion/month to US$10-15 billion/month. up to US$140 billion will flow into the Chinese bond market in 2021.
Analysts at Goldman Sachs point out that the reasons for inflows into China include a positive outlook for the yuan, strong growth in the Chinese economy, better control of the epidemic, and the possibility of renewed engagement with China after Biden becomes US president.
But Japanese investors, an important user of the FTSE, have voiced opposition to China’s entry into the FTSE. Participants such as Japan’s largest retirement fund, the government pension investment fund, which manages 172 trillion yen, cited the lack of full convertibility of the yuan as well as problems with bond liquidity, settlement and taxation as reasons for their opposition. The Japanese government pension fund currently invests very little money in the Chinese bond market, and 90% of Japanese participants in this fund do not like investing in the Chinese market.
Market analysts believe that this is due to the historical lack of mutual trust between China and Japan.
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