Together with the China Foreign Exchange Trade System, Bloomberg announced on Thursday that it and its global affiliates will start to provide investors with channels to access China’s inter-bank bond market (CIBM).
Global investors can now begin to trade onshore Chinese bonds via the Bloomberg Terminal.
“The reality is China’s bond market is an opportunity many investors can no longer ignore. Clear regulatory frameworks and access mechanisms drive market liquidity and demand – key components towards China being an investable bond market,” said Mary Schapiro, vice-chairman of Bloomberg, at the China Bond Market International Forum in Beijing on Thursday.
Bloomberg is the first global trading platform connected to the China Foreign Exchange Trade System that will offer access to both CIBM Direct and Bond Connect, the two most popular schemes used by offshore China investors.
“With these two new access channels, we expect the appetite to seek yield, liquidity and alpha in China’s $12 trillion bond market to grow further,” said Schapiro.
Currently 1,186 overseas institutional investors are investing in Chinese onshore bonds, and their total investment has reached 1.73 trillion yuan.
“A competitive return on investment is one of the main drivers for foreign investors to enter China’s bond market, in addition to the increase of market transparency and improvement of liquidity,” said Li Bing, head of Bloomberg China.
The types of foreign investors have diversified in the last three to five years, with sovereign wealth funds, central banks, large asset management companies, hedge funds and corporate firms investing in the Chinese bond market, he said.
As of the end of 2018, China ranked third globally on the size of its bond market, following the United States and Japan. The balance of its bond market hit 86 trillion yuan ($12.7 trillion).
Pan Gongsheng, deputy governor of the People’s Bank of China, the central bank, said the country will gradually further define details in policy to encourage international investment in its bond market.
“We are preparing to launch bond index products such as bond ETFs, promote interconnectivity among central depository institutions, and extend the settlement cycle for bond trading,” said Pan.
The People’s Bank of China will further liberalize bond repurchase transactions and push for the use of renminbi derivatives, he added.
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