After FTSE inclusion, China bonds still face CNY hedge hurdles

Lack of pricing competition and costly hedges top buy-side hurdles to investing in China, says ChinaFICC CEO


The long-awaited inclusion of Chinese government bonds in the FTSE World Government Bond Index (WGBI) on October 29 marks a turning point in capital markets, with billions of dollars set to flow into the world’s second-largest economy.

An estimated US$130 billion–160 billion of inflows into China’s bond markets from funds that directly follow the index are expected, although the phase-in time has been lengthened from one to three years. 

The opening up of China’s capital markets has

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