9 things to know about China’s bond markets

9 things to know about China’s bond markets

Summary

China’s bond markets have historically been underutilised by many foreign investors, but things are changing. Steady reforms, an increasingly internationalised currency and attractive yields are resulting in increased inflows. Read these nine tips to understand the essentials of investing in China’s fixed-income marketplace.

Once largely out of reach to foreign investors, China’s equity markets have opened up as the country’s economy transforms. From Shenzhen and Hong Kong listings to the Nasdaq-like STAR board, Chinese companies are attracting significant investor capital. Here’s what you need to know.

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1. Source: Asian Bonds Online. Data as at 31 December 2020. 
2. Source: FTSE Russell. Data as at 31 December 2020 (updated quarterly). FTSE Dim Sum Bond Index is an unmanaged index considered representative of the China offshore CNH bond universe. 
3. Source: JP Morgan. Data as at 31 December 2020. JP Morgan Asia Credit Index (JACI) is an unmanaged index considered representative of the Chinese USD denominated bond universe. 

Index information for Exhibit 8: Asia ex-Japan equity is represented by MSCI AC Asia ex. Japan Index; Asia bonds by J.P. Morgan JACI composite Total Return; China onshore government by Markit iBoxx ALBI China Onshore Government (USD Unhedged) TRI; China onshore aggregate by Bloomberg Barclays China Aggregate TR Index; China A-shares by MSCI China A Onshore Net Total Return Index USD; emerging-market hard-currency bonds by J.P. Morgan EMBI Plus Composite; emerging-market local-currency bonds by J.P. Morgan GBI-EM Global Diversified Composite Unhedged USD; US investment grade by ICE BofA US Corporate Index; US high yield by ICE BofA US High Yield Index; global sovereign by J.P. Morgan GBI Global Unhedged USD; global aggregate by Bloomberg Barclays Global Aggregate Total Return Index Value Unhedged USD; global equity by MSCI ACWI Index; global emerging-market equity by MSCI Emerging Markets Gross Total Return USD Index; global REITs by MSCI World Real Estate Total Return USD Index. Investors cannot invest directly in an index. 

Investing involves risk. The value of an investment and the income from it will fluctuate and investors may not get back the principal invested. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bond prices will normally decline as interest rates rise. The impact may be greater with longer-duration bonds. Credit risk reflects the issuer’s ability to make timely payments of interest or principal—the lower the rating, the higher the risk of default. Emerging markets may be more volatile, less liquid, less transparent, and subject to less oversight, and values may fluctuate with currency exchange rates. Past performance is not indicative of future performance. This is a marketing communication. It is for informational purposes only. This document does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed an offer to sell or a solicitation of an offer to buy any security.

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10 things to know about China equities

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Summary

Once largely out of reach to foreign investors, China’s equity markets have opened up as the country’s economy transforms. From Shenzhen and Hong Kong listings to the Nasdaq-like STAR board, Chinese companies are attracting significant investor capital. Here’s what you need to know.

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