British index provider FTSE Russell has said it plans to include Chinese government and policy bank debt in the FTSE Global Government Bond Index (WGBI) in October this year, which has attracted widespread global attention.
According to Reuters, FTSE Russell’s decision was opposed by Japanese investors, including Japan’s largest pension fund, The Japanese Government Pension Investment Fund (GPIF), who objected on the grounds of, among other things, the lack of full convertibility of the yuan and problems with bond liquidity, settlement and taxation.
Yoshikazu Kato, a researcher at Rakuten Securities’ Economic Research Institute, said in response, “In the case of the GPIF, I think it would be difficult for it to invest in China when nearly 90 percent of Japanese people have a negative view of China [the Communist Party of China].”
And Japanese investors are the most prominent users of the FTSE.
The news quoted market analysts as commenting that this is the result of a historical lack of mutual trust between China and Japan.
But some analysts believe that the Chinese Communist Party’s war-wolf diplomacy has hurt neighboring countries, while the Chinese Communist Party’s manipulation of the yuan exchange rate and lack of transparency in both economic data and local debt are big taboos in the investment market. It has been previously reported that the Chinese Communist Party has exerted great pressure on JP Morgan Index (MSCI) to include some mainland A-shares in it.
According to Radio Asia, Goldman Sachs, an international investment bank, predicts that once Chinese bonds are included in the FTSE index, investment flows into the Chinese debt market will increase from US$5-10 billion per month to US$10-15 billion per month, and up to US$140 billion will flow into the Chinese debt market in 2021.
Recent Comments