China and Hong Kong have launched a bond trading link that brings the world’s third-largest debt market one step closer to widespread acceptance in international investors’ portfolios.
The so-called Bond Connect will allow foreign fund managers to trade in China’s $9tn government, agency and corporate debt markets without, for the first time, having to set up onshore accounts.
More than $1tn of offshore bond funds could flow into Chinese debt in the next decade, predicts Goldman Sachs.
The link, a sister scheme to the Stock Connects already running among Hong Kong, Shanghai and Shenzhen, is likely to help China win inclusion in global bond indices — a move analysts expect the big bond index providers to make in the next year. Doing so would force the hundreds of billions of dollars following those benchmarks to begin diverting funds to mainland Chinese markets.
In Asia Pacific equities, Japan’s Topix index was up 0.2 per cent while Australia’s S&P/ASX 200 was off 0.5 per cent. Hong Kong’s Hang Seng index was flat with the Shanghai Composite trading flat and the Shenzhen Composite was 0.2 per cent higher.
Futures tip the FTSE 100 to climb 0.3 per cent at the open, while the S&P 500 is expected to rise 0.3 per cent when trading begins in New York.
The economic calendar for Monday is brought to you by the letters P, M and I (all times London):
- 08.00: Turkey consumer price index
- 08.00: Netherlands Nevi manufacturing purchasing managers’ index
- 08.15: Spain Markit manufacturing PMI
- 08.45: Italy Markit manufacturing PMI
- 08.50: France Markit manufacturing PMI
- 08.55: Germany Markit manufacturing PMI
- 09.00: eurozone Markit manufacturing PMI
- 09.00: Greece Markit manufacturing PMI
- 09.30: UK Markit manufacturing PMI