On September 25, the FTSE Russell Company announced the inclusion of Chinese government bonds in the FTSE Russell Global Government Bond Index (WGBI), which is expected to take effect in October 2021.

The specific inclusion date will be finalized after a semi-annual assessment in March 2021.

　　All three indexes are included

　　So far, the three major global indexes have included Chinese bonds.

　　Prior to this, two other major global bond indexes-Bloomberg Barclays Index and JPMorgan Chase Global Emerging Market Diversified Bond Index (GBI-EM GD) have included Chinese bonds in the international mainstream bond index.

　　Market participants believe that the FTSE Russell Global Government Bond Index (WGBI) is more critical because it is more preferred by passive investors.

The market expects that after the success of the Nasdaq, it is expected to bring inflows of US$125 billion to US$150 billion to the Chinese bond market.

　　As of the end of August 2020, the scale of international investors’ debt holdings reached 2.8 trillion yuan, an average annual growth rate of 40% in the past three years.

　　Some analysts believe that the inclusion of Chinese bonds in major international indexes is another major achievement of the opening up of China’s bond market, reflecting China’s continuous improvement in the global financial market, and reflecting the confidence of international investors in the Chinese market, which is conducive to strengthening the index The representativeness and attractiveness of the company will help global investors to allocate bond assets more reasonably.

　　Two-way capital flow is more convenient

　　Since the beginning of this year, foreign investors have accumulatively increased their domestic bond holdings by more than RMB 1 trillion, and the depth and breadth of foreign participation in the domestic capital market has continued to expand.

In addition to "bringing in", the opening of the "outflow" financial market is also progressing in an orderly manner.

　　A few days ago, the State Administration of Foreign Exchange launched a new round of Qualified Domestic Institutional Investor (QDII) quota issuance. A total of USD 3.36 billion QDII quota was issued to 18 institutions, covering multiple types of institutions such as funds, securities, and wealth management subsidiaries.

　　QDII, namely qualified domestic institutional investors, allows qualified domestic financial institutions to invest in overseas financial markets within a certain amount.

Together with the QFII/RQFII system, it is an important mechanism for the two-way opening of financial markets.

This moderate increase in QDII quota is conducive to the realization of two-way capital flow.

　　It is worth noting that this time, taking into account the quota requirements of new institutions, QDII quotas were issued to 5 institutions that applied for quotas for the first time.

So far, a total of 157 QDII institutions have received an investment quota of US$107.343 billion.

　　Wen Bin, chief researcher of China Minsheng Bank, believes that this can orderly ease the demand for overseas asset allocation of domestic entities and maintain the basic balance of cross-border capital flows.

　　The door will open wider and wider

　　This year, a series of financial opening measures were intensively introduced.

　　In August, Connect (Hangzhou) Technology Service Co., Ltd. was inaugurated in Hangzhou, marking the first overseas card organization-American Express officially entered the Chinese market.

In addition to American Express, another wild card organization, MasterCard, has also approved the preparation application of MasterNet, a joint venture company established by MasterCard, and will apply to the Central Bank for business operations after completing the preparatory work within the one-year preparatory period.

　　On May 7, my country clarified and simplified the management requirements for domestic securities and futures investment funds of foreign institutional investors, abolished the management requirements for domestic securities investment quotas for qualified foreign institutional investors (QFII) and RMB qualified foreign institutional investors (RQFII), and cancelled the custodian Quantity restrictions, etc., will further facilitate foreign investors to participate in my country's financial market.

　　The continuous deepening of financial reform and opening up has gradually established a market environment in which foreign institutions and foreign funds are "willing to come" and "retain".

Many foreign investors have regarded buying Chinese bonds as a long-term strategy.

In an interview with Economic Daily, Huang Jiacheng, head of Invesco Fixed Income Asia Pacific, said that not only Asian investors, but also European, Middle Eastern, African and North American investors are also increasing their allocation of Chinese bonds. It is expected that this proportion will increase in the next three years. Rise further.

　　Source: Economic Daily WeChat Official Account (ID: jjrbwx)

　　Reporter: Chen Guojing