China's Bond Market Could See Massive Growth in Next Three to Five Years, Nomura Says
Xu Wei
/SOURCE : Yicai
China's Bond Market Could See Massive Growth in Next Three to Five Years, Nomura Says

(Yicai Global) Sept. 7 -- China's bond market boasts enormous development potential over the next three to five years, an analyst at Nomura Securities Co. said at the brokerage's annual investment conference yesterday.

Nomura Securities is a wholly-owned subsidiary of Japanese financial company Nomura Holdings Inc. [NYSE:NMR].

This is because China's bond market is very big, and offers higher bond yields than most other markets such as South Korea, Singapore, Hong Kong, Taiwan and Thailand, the analyst explained.

The reason the market hasn't attracted much in investment so far is because in the past couple of years investors have been worried about the devaluation of the yuan, but the situation has changed now and the market is less pessimistic, he added.

A crucial factor is whether or not major global bond indexes will include Chinese bonds in the next several years, just like the A-share's inclusion in the Morgan Stanley Capital International Index, better known as MSCI. The three most important indices are JP Morgan's index of developing economies, Citi's global index and Barclays' Global Aggregate Index, the analyst said.

If all three indices cover Chinese bonds, it could see another USD200 billion to USD250 billion invested into China by passively managed funds alone.

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Keywords: Nomura , Bonds