(Yicai Global) April 2 -- Overseas institutions conducted 2.4 percent, or CNY18.5 billion (USD2.75 billion), of all bond spot trades in China's interbank market yesterday, according to the nation's daily market transactions monitor, as Chinese debt was added to a flagship benchmark of global investment grades for the first time.
Bond spot trades in the over-the-counter market totaled CNY759.9 billion (USD113.2 billion) as Bloomberg began including Chinese debt in its Bloomberg Barclays Global Aggregate Bond Index, the China Foreign Exchange Trading System & National Interbank Funding Center said yesterday.
In the first quarter, transactions by overseas institutional investors jumped 31 percent from a year earlier to CNY919.1 billion, and nearly 300 new foreign institutional investors opened trading accounts, making up 70 percent of the total opened last year, CFETS data showed.
Overseas institutions have been moving into the Chinese bond market at a faster pace since the start of this year, the CFETS noted, saying many products from the world's largest asset management firms such as BlackRock and The Vanguard Group, have appeared in the market. China will continue to improve procedures and functions for overseas institutions to invest in the OTC bond market, it added.
Yuan-denominated government and policy bank securities started to be fed into the Bloomberg Barclays Global Aggregate Bond Index yesterday, a process that will take 20 months. When fully included, the bonds will be the index's fourth-largest component behind those based on the US dollar, the euro and the Japanese yen.
JPMorgan Chase's global index team has predicted that their inclusion in the world's three major fixed income indexes, the BBGA, the J.P. Morgan Government Bond Index-Emerging Markets Global Diversified and the Financial Times Stock Exchange World Government Bond Index, will result in capital inflows of USD250 billion to USD300 billion.